THE WALL STREET JOURNAL: ChevronTexaco Seeks to Finalize Deals With Chinese LNG Buyers: “ChevronTexaco, ExxonMobil Corp. and Royal Dutch/Shell Group have agreed to jointly develop several natural-gas fields off the Australian coast, according to officials familiar with the agreement.” (ShellNews.net) Posted 7 April 05

By STEPHEN BELL

DOW JONES NEWSWIRES

PERTH, Australia -- ChevronTexaco Corp. said Wednesday that it hopes to conclude talks with Chinese buyers of liquefied natural gas in the next few months, now that it has resolved ownership of its 11 billion Australian dollar (US$8.4 billion) Gorgon LNG project off the Australian coast.

The Gorgon venture signed an initial A$30 billion agreement in October 2003 to supply as much as 100 million metric tons of LNG to China National Offshore Oil Corp. over 25 years. As part of that deal, CNOOC agreed to buy a 12.5% stake in the project. It is believed that CNOOC will now be offered a 5%-6% stake in the enlarged venture.

A combined ownership and natural-gas supply deal was meant to be finalized with CNOOC by the end of last year. ChevronTexaco declined to comment on speculation the two companies differ over how much CNOOC should pay for its equity stake amid rising energy prices.

"This is a large project and the negotiations are challenging and difficult -- they are taking longer than we anticipated," the spokesman said, adding that Gorgon hopes to conclude a deal with in the next "few months."

ChevronTexaco, ExxonMobil Corp. and Royal Dutch/Shell Group have agreed to jointly develop several natural-gas fields off the Australian coast, according to officials familiar with the agreement.

The move is aimed at lowering overall costs and bolstering the marketing clout of the project, which will produce LNG for markets in Asia and the U.S. West Coast.

The combined field, which includes the Gorgon and Io-Jansz fields, has an estimated 40 trillion cubic feet of recoverable natural gas, making it one of the largest in the world. The companies haven't booked the natural gas as undeveloped reserves yet because final sales agreements aren't in place.

In the deal, ChevronTexaco will have a 50% stake and will operate the field. ExxonMobil and Shell each will take a 25% stake, according to officials. To reach this split, ChevronTexaco is expected to sell some interests to Shell ; details of that transaction weren't available.

Gorgon is also seeking to finalize deals with ChevronTexaco and Shell , which have conditionally agreed to use Gorgon natural gas for two planned LNG import terminals in the U.S. and Mexico.

Demand for LNG in Asia is rising as countries such as China and India prepare to join Japan and Korea as major importers of the fuel. But Gorgon, one of Asia's biggest natural-gas accumulations discovered three decades ago, faces intense competition from other suppliers in Australia, along with the Middle East, Russia, Malaysia and Indonesia.

--Wall Street Journal Staff reporter Russell Gold contributed to this story.

Write to Stephen Bell at stephen.bell@dowjones.com. 

Click here for ShellNews.net HOME PAGE