Woodside Petroleum chief executive Don Voelte has given the Chinese Government a thinly veiled warning that it will miss out on LNG supplies if it doesn’t respect the market, reported The Australian (25/4/2006, p.21).
Market in need of confidence boost: Speaking during the weekend at the Boao Forum For Asia in Hainan, Voelte said: "In an age of energy uncertainty, markets and market prices should not be viewed with suspicion as sources of volatility and instability."
NWS LNG ready for China: Next month, China’s first LNG receival terminal in Guangdong province will receive its inaugural shipment from the North West Shelf gas project which has signed a 25-year, $25 billion contract to supply 3.3 million tonnes of LNG a year.
But no further sales planned: Despite expectations that the contract would lead to further sales in China, none have been forthcoming, because the market has changed since the Guangdong contract was initialled in August 2002.
Supply to lag behind demand: Voelte said it could take years before investments resulted in sufficient production to meet new demand and "maintain a certain amount of surge capacity". "So in an era which may be subject periodically to tight supply, demand and prices may see some volatility," he said.
No match for 1970s prices: The Woodside chief noted that while spot prices for LNG cargoes followed short-term market trends, long-term contracts for LNG were only now returning to the levels seen in the early 1990s and were still far below the levels they were during the 1970s and 80s.
The Australian, 25/4/2006, p. 21