SYDNEY (AP) — Energy giant PetroChina Co. Ltd. has pulled out of a $40 billion deal to buy natural gas from a project off Australia, leaving Woodside Petroleum Ltd. looking for new customers.
Reasons for letting the preliminary agreement lapse were not given, but analysts said Tuesday it was probably because PetroChina had become dissatisfied with the cost in the two years since the deal was signed.
Woodside informed Australia’s stock exchange on Monday that an early stage agreement for the Browse Basin liquefied natural gas project off Western Australia state had not been settled by a Dec. 31 deadline and had now lapsed.
A spokesman for PetroChina Ltd. in Beijing, Liu Weijiang, said on Tuesday he had no information on the deal and asked a reporter to call again later.
Under the September 2007 agreement, PetroChina would potentially buy up to three million metric tons (3.3 million tons) of LNG per year from the project for up to 20 years.
At the time, it was one of Australia’s largest export deals with an estimated worth of AU$45 billion ($40 billion).
Since then, deals between prospective developers of the massive gas reserves on Australia’s so-called Northwest Shelf and customers have accelerated, with companies in China, Japan and South Korea signing on to multibillion dollar, two-decade agreements last year.
The lapse of the PetroChina deal means that the terms, including price, for a large chunk of the Brown Basin gas are once again fully open to negotiation.
“The deal was good at the time, but in the past two years things have been changing rapidly,” said Peter Kopetz, energy analyst with Western Australia-based State One Stockbroking.
PetroChina would probably look for other sources of gas, said Yang Wei, an oil industry analyst at Guotai Junan Securities in Shanghai.
“I think it’s probably that the price is not right. It’s too expensive,” he said.
PetroChina in August reached a $41 billion deal to buy natural gas from another project in the same region, that is being developed by Chevron.
Chinese energy companies have signed a multibillion-dollar string of deals to import oil and gas from the Gulf, Africa, Central Asia and elsewhere to feed the demands of the country’s rapidly growing economy.
Woodside had hoped the Browse project would be in production by 2012, but the company said Monday this timeline was no longer realistic, and a final investment decision by partners including Woodside, Chevron, BHP Billiton and Royal Dutch Shell would not be made until mid-2012.
Woodside said an agreement for CPC Corporation Taiwan to buy up to three million metric tons (3.3 million tons) of LNG per year for up to 20 years from the Browse project was still in place, and the company was looking for more customers.
“Woodside remains in ongoing discussions with other Asia-Pacific LNG customers in relation to potential sales from its portfolio of Australian LNG developments, including the Browse project,” Woodside said in a statement.
Woodside shares closed just shy of 1 percent higher on Tuesday at AU$47.97.
Associated Press researcher Bonnie Cao in Beijing contributed to this report.