$50 billion China signs our biggest trade deal

Adelaide Advertiser
Wednesday 19/8/2009 Page: 1

AUSTRALIA has cemented its biggest trade deal - a whopping $50 billion contract to supply liquefied natural gas to China.

The gas coup confirms that Australia and China are maintaining a "business as usual" approach to economic relations - despite the diplomatic rift caused by the detention of Rio Tinto executive Stern Hu. The lucrative export deal, announced last night in Beijing, also will raise hopes the Australian economy is well on the road to recovery, spurred on by a wave of exports to resource-hungry Asian countries.

Resources and Energy Minister Martin Ferguson last night hailed the trade deal, which will see resources giant Exxon-Mobil supply gas from the $50 billion Gorgon field in Western Australia. Speaking from Beijing, Mr Ferguson said the 20-year export contract was "testimony to the strength of Australia's continuing trade and investment relationship with China". "This unprecedented export deal confirms Australia's place as a global energy superpower supplying vital clean energy resources and technologies to China and our other Asia-Pacific trading partners," Mr Ferguson said.

The lucrative contract comes as the Government grapples with the fallout from the Hu arrest, and Chinese anger over Canberra's decision to allow exiled Uighur leader Rebiya Kadeer into Australia. Foreign Minister Stephen Smith yesterday admitted that China had downgraded official talks with Australia earlier this month because of his decision to grant her a visa. "China was most unhappy with her visit and as a consequence of her visit they indicated to Australia that the proposed visit.., of Vice- Minister He Yafei would not occur and that China would be represented by an ambassador," Mr Smith told Parliament.

But this diplomatic rift hasn't derailed commercial deals with China. The LNG pact comes just one week after Exxon-Mobil, which has a 25% investment in Gorgon, signed a $25 billion deal with India. Exxon-Mobil executives signed the 20-year export deal with PetroChina in Beijing last night. The heavily-guarded announcement will help ensure the viability of the $50 billion Gorgon development, whose other partners comprise Shell and Chevron. It is now destined to become Australia's most lucrative resources project, with forecast LNG export sales of $300 billion during the next 20 years.

Mr Ferguson, speaking at the signing ceremony, talked up economic and trade links with China. He said Australia had "an obligation to help China and our other neighbours in the Asia-Pacific to meet their growing energy needs in a sustainable way". The deal will help fuel hopes of a better than expected recovery from the global downturn, underpinned by a series of key resources projects. Located 130km off the West Australian coast, the Gorgon project spearheads a range of vast resources deals that are under way - or in planning - across Australia.

Just last week, the Gorgon project received final environmental clearance from the Western Australian Government. The three partners are waiting for final clearance by the Federal Government - but well placed sources say that appears a formality. The LNG project will be a boon for the domestic economy, creating up to 6000 jobs at the peak of construction. It also will generate about $40 billion in revenue for the Government.

While Exxon-Mobil was signing its lucrative deal in China, another proposed $35 billion LNG plant was being announced for Queensland yesterday. The Queensland Government and Australia Pacific LNG announced a 230ha site at Laird Point on Curtis Island, Gladstone, as the preferred site for the project. It is expected to generate up to 10,000 jobs.