Australia, China pen huge gas deal

The Australian government said yesterday that US giant ExxonMobil had inked a deal to sell liquefied natural gas from its share of an LNG project in Australia to PetroChina in a deal worth about A$50 billion ($41.29 billion).

Under the deal, PetroChina will buy 2.25 million tons per annum of gas from the Gorgon LNG project for a period of 20 years, Australia's Minister of Resources and Energy Martin Ferguson said in a statement.

The Gorgon venture promises to be Australia's biggest resources project, pumping $40 billion into the federal government's tax coffers over the next 20 to 30 years, The Australian newspaper reported.

As the search for cleaner energy options intensifies, hundreds of billions of dollars in commitments have been signed with not only China but Japan, India and South Korea.

Australia said the agreement was a reflection of the strength of Australia's continuing trade and investment relationship with China. Two-way trade last year was worth $53 billion.

Analysts said that while political relations had soured in the wake of the arrest of an Australian mining executive in China, commercial deals in the resources sector should be largely unaffected because both countries needed each other so much.

"It's a statement about the nature of our two economies and the fact that Australia is important to China, just like China is important to Australia," Ferguson said of the contract.

"Australia is a resource-and-energy-rich nation, and we have a capacity, if we develop our resources, to meet the economic needs of China," Ferguson said in Beijing.

Business deals continue apace between the two nations, despite disconcerting notes from Canberra's issuing of a visa to Rebiya Kadeer, who Beijing blames for instigating the July 5 riots in the Xinjiang Uygur Autonomous Region.

Shen Shishun, a former Chinese diplomat and now senior research fellow at the China Institute of International Studies, said he did not expect the friction to do lasting damage. The two countries were too important to each other economically, he said.

"Chinese people feel very strongly about the July 5 incident in Xinjiang, and so there is public anger about her going to Australia. That must affect relations," Shen noted. "I think overall China-Australia relations will remain healthy."

Upstart Australian mining company Fortescue Metals Group this week agreed a slightly cheaper iron ore price with Chinese steel mills than that sought by major miners in exchange for up to $6 billion in funding.

Meanwhile, China's state-owned Yanzhou Coal Mining is seeking to buy Australian coal miner Felix Resources in a $2.9 billion deal requiring approval from Australia’s government.

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