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Australia, Indonesia acquire LNG supply contracts for China

Australia said it won a contract to supply as much as A$25 billion (US$13 billion) of liquefied natural gas to China's first LNG import terminal, beating rivals Qatar and Indonesia.

A rival bidder, BP Plc's Tangguh project in Indonesia, won a second contract to supply another terminal, Xinhua news agency said, citing China National Offshore Oil Corp. Instability in Indonesia may have prevented Tangguh from winning a share in the first contract, said Deutsche Bank analyst John Hirjee.

"I think that security of supply and political stability must have ranked very highly," Hirjee said.

"We thought the Australians were probably the highest priced of the candidates. Qatar was probably the cheapest, but the Chinese have always had a stated policy of trying to diversify away from OPEC countries."

China wants to reduce its reliance on energy supplies from OPEC, he said.

Australia's North West Shelf venture, operated by Woodside Petroleum Ltd, will supply 3 million metric tons of LNG a year, to the first terminal being built in Guangdong province, Prime Minister John Howard said.

"This is Australia's largest single export deal," Howard said.
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