China suffers intensified gas shortages
- Source: Global Times
- [08:30 January 06 2010]
- Comments
By Song Shengxia
An Australian natural gas company announced Monday the end of a $40.4 billion agreement with PetroChina, provoking strong reactions in China, which is increasingly grappling with gas shortages.
The agreement with PetroChina, signed in 2007, expired on December 31. The company has not reached any further agreement with China's largest gas supplier, Australian natural gas company Woodside said in a statement, without elaborating.
According to the 2007 non-binding agreement, Woodside would potentially supply 2 to 3 million tons a year of liquefied natural gas (LNG) from its Browse Basin Develop ment to PetroChina over 20 years. At the time, the agreement was hailed as Australia's largest export deal, worth an estimated AU$45 billion ($40.4 billion).
PetroChina declined to comment Tuesday, leading to speculation on the motive.
Watoday, an Australian daily, suggested that a delay in the Browse Basin development in Western Australia had caused PetroChina to abandon the potential deal of buying up to 60 million tons of gas.
"In 2007, when the deal was signed, supply from Browse was expected to begin from 2013 and 2015," a Woodside spokeswoman told Watoday on Monday. "That timing is no longer realistic for Browse, (with a potential) final investment decision in 2012."
Yvonne Ball, a Woodside spokesperson, declined to confirm the speculation, saying the company would keep PetroChina informed of progress in its LNG export projects.
Woodside's November 2007 agreement with CPC Corporation Taiwan to supply 2-3 million tons of gas a year over 20 years remains in place.
Japan's Osaka Gas has also agreed to buy up to 1.5 million tons of LNG a year from Browse.
China has suffered severe shortages of gas since last November, which are expected to grow to 30 billion cubic meters next year and could reach 40 billion in 2015, the China News Agency reported.
Gas shortages have become more acute recently due to heavy snowfalls and a cold snap hitting northern China.
PetroChina said on Monday it has purchased 65,000 tons of gas at the current market price to cope with the new peak in demand, incurring more than 60 million yuan ($8.8million) in losses, Shanghai Securities News reported.
Despite the ambiguity about which party is determined not to renew the agreement, some Chinese experts say the termination is a big loss to China.
"From the energy-security perspective, China could suffer a great loss from the discontinued deal, as it was struck in 2007 when the cost of gas was lower than the current level," Xu Xiaojie, a researcher at the Institute of World Economics and Politics at the China Academy of Social Sciences, said.
