ExxonMobil seals $41bn China LNG deal

Australia and China struck their biggest trade deal ever today as the world's two most valuable listed oil companies, Exxon Mobil and PetroChina, agreed a $41 billion liquefied natural gas deal.

"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," Australian Resources Minister Martin Ferguson told Reuters in Beijing.

The gas sale agreement between ExxonMobil and PetroChina comes just weeks after ExxonMobil signed a A$10 billion (US$8.24 billion) Gorgon LNG sales deal with India's Petronet, which marked Australia's first ever LNG contract with India.

The deals, along with regulatory approvals process from the federal government now nearing completion, means that the Gorgon project partners could approve the massive LNG project, located off Western Australia, as early as next month.

The latest Gorgon gas sale would bring PetroChina's total LNG purchase from the project to a total of 3.25 million tonnes per annum for 20 years - making it the largest buyer of gas from the project.

Despite the volumes it is buying, the fact that PetroChina has not secured a minority stake in the project is an indication that demand for long-term LNG supplies is still buoyant despite the current economic downturn.

With a long list of around a dozen proposed LNG projects in the Asia-Pacific region, buyers are also eager to lock in supplies as quickly as possible from projects that are most likely to be developed.

In the deal signed today, PetroChina will buy 2.25 mtpa of gas from the Gorgon LNG project for a period of 20 years, Ferguson said in a statement.

The sale is Australia's most valuable trade deal ever with China, Australia said, adding that the agreement was a reflection of the strength of Australia's continuing trade and investment relationship with China.

The massive Gorgon LNG project, operated by Chevron which owns a 50% stake, is located off western Australia and has a proposed annual output of 15 mtpa.

ExxonMobil and Shell each own a 25% stake in the project.

Chevron and its partners may give final investment approval for the much-delayed Gorgon project as early as next month, with the project expected to cost about A$50 billion, according to Western Australia Premier Colin Barnett.