Gas Week

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Shell to supply one million tonnes of LNG annually to PetroChina over a 20-year period from WA Gorgon project

Posted by gasweek on 19 September, 2007

Shell executed a binding heads of agreement for the supply of one million tonnes of LNG annually to PetroChina over a 20-year period, reported The Canberra Times (5/9/2007, p. 13). New benchmark for LNG supplies into China: The key terms of the agreement provided for the two groups to work together and conclude a detailed LNG sale and purchase agreement before December next year. The massive Gorgon project was a joint venture between largest stake­holder and operator Chevron Corp, ExxonMobil and Shell. Shell Gas and Power Asia vice-president Ion Chadwick said the agreement underlined the com­pany’s commitment to the Gorgon project. “Shell is delighted to have secured this strategic agreement with PetroChina, which sets a new benchmark for LNG supplies into China and underlines Shell’s com­mitment to Chinese LNG customers and to the Gorgon project.”

Change of direction for Shell: Shell’s agreement with the Chinese marked a turn in direction for the oil producer, which had previously said it would market its share of Gorgon gas in the US. Chinese interests had been in offtake discussions with the Gorgon partners earlier this decade, but the negotiations broke down. Chevron said Shell’s deal with PetroChina was a vote of confidence for the Gorgon project, which had been dogged by delays in the past. The project involved a two-train LNG plant and a domestic plant on Barrow Island, producing about 10 million tonnes of LNG annually.

The Canberra Times, 5/9/2007, p. 13

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