PetroChina Signs Long-term Agreement with Shell to Procure LNG from Gorgon Project in Western Australia

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Researched by Industrial Info Resources (Sugar Land, Texas)--PetroChina International Company Limited (Beijing), a subsidiary of PetroChina Company Limited (NYSE:PTR) (Beijing), has signed a long-term sales and procurement agreement for liquefied natural gas (LNG) with Shell International Eastern Trading Corporation, a subsidiary of Royal Dutch Shell (NYSE:RDS.A) (The Hague, The Netherlands).

According to the agreement, Shell will supply 2 million metric tons of LNG every year from the Gorgon Project in western Australia and the Shell LNG portfolio to PetroChina for 20 years. In April 2008, China National Petroleum Corporation, PetroChina's holding company, signed a 25-year long-term sales and procurement agreement with Qatar Gas and Shell to procure 3 million metric tons of LNG every year from Phase IV of the Qatar Natural Gas Project.

Shell holds 25% of the shares in the Gorgon Project. The company is also involved in the Northwestern Continental Shelf Project in Australia, where 3.3 million metric tons of LNG have been delivered from the project to LNG terminals in southern China's Guangdong province every year starting from May 2006.

The total supply of 5 million metric tons of LNG from Shell to PetroChina has surpassed all orders signed between other suppliers. Petroleum companies in China reportedly have signed long-term LNG supply contracts with Iran, Malaysia and Total SA (NYSE:TOT) (Paris). The price of LNG is largely related to the price of petroleum, and the signing of long-term contracts at low points will be favorable for Chinese enterprises to reduce procurement costs.

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