CPC to buy LNG from Australia's Woodside Browse

CPC Corp (台灣中油), the nation's only natural gas importer, plans to buy liquefied natural gas (LNG) from Woodside Petroleum Ltd's Browse project in Western Australia, becoming the venture's second customer, a CPC official said.

CPC could sign a final contract this year to buy as much as 3 million tonnes of the fuel annually, said the official, declining to be identified because of a confidentiality agreement with Woodside. Supplies could start in 2013.

Taiwan's LNG demand is forecast to rise 31 percent to 10.5 million tonnes in 2010 and to double by the end of the next decade. The nation uses LNG for more than 90 percent of its gas and is Asia's third-largest buyer of the fuel. CPC's contract may be valued at as much as US$37 billion, based on a similar agreement Woodside signed with PetroChina Co last week.

"CPC is in desperate need of LNG supplies," said Wu Tsai-yi (吳再益), a vice president at the Taiwan Research Institute, who advises the government on energy policy. "Two to three million metric tonnes a year isn't enough."

The Taiwanese oil refiner is in talks to buy 500,000 tonnes of LNG a year from Peru and Iran is another possible source of the fuel, said the CPC official, declining to name the potential sellers in Iran.

Jessica Tang (唐苑莉), a CPC spokeswoman, and Roger Martin of Perth-based Woodside, also declined to comment.

PetroChina Accord

PetroChina, Asia's largest oil company by market value, agreed on Sept. 6 to buy 2 million to 3 million tonnes of LNG a year over 15 years to 20 years starting in 2013 from Browse, 47 percent-owned by Woodside. The project, Woodside's largest undeveloped gas asset, is set to tap about 20 trillion cubic feet of gas and 311 million barrels of condensates off the northwest coast.

PetroChina may have agreed to pay US$7 to US$9 per million British thermal units for the gas, UBS AG said in a Sept. 6 report.

"There probably won't be big differences between the CPC and PetroChina deals," Wu said.

The transaction with Asia's largest oil company by market value was worth between A$35 billion (US$28.9 billion) and A$45 billion, Woodside chief financial officer Mark Chatterji said on Sept. 6.

Woodside chief executive officer Don Voelte said on Aug. 24 that the Australian company was set to widen its range of long-term LNG customers beyond Japan, South Korea and China. The company does not have any long-term contracts to sell LNG to Taiwan.

STAKES

BP Plc, BHP Billiton Ltd, Chevron Corp and Woodside's 34 percent shareholder Royal Dutch Shell Plc own stakes in Browse. Woodside owns approximately 47 percent of the venture and is the operator.

CPC has three contracts with Indonesia and Malaysia for 5.6 million tonnes of LNG a year. A 25-year contract with Ras Laffan Liquefied Natural Gas Co -- known as RasGas -- for as much as 3 million tonnes a year, will start next year. RasGas is a Qatari joint venture with Exxon Mobil Corp, the world's largest publicly traded oil company.

CPC's first contract with Indonesian state oil company PT Pertamina for 1.54 million tonnes of LNG a year will expire in 2009 and a second contract for 1.84 million tonnes ends in 2017.

The state-owned Taiwanese energy company's contract with Malaysia LNG Sdn for 2.25 million tonnes a year will end in March 2015. Malaysia LNG is a unit of Petroliam Nasional Bhd.