Shell wins $10bn US gas deal

PERTH - Royal Dutch/Shell will supply up to 2.5 million tonnes a year of liquefied natural gas (LNG) from Australia's Gorgon gas fields to the United States west coast in a deal worth more than A$10 billion ($10.74 billion), a Shell official said.

The deal, which will mark the first delivery of Australian gas to the west coast of North America under a long-term contract, will span 20 to 25 years from 2010.

It commits all of Shell's share of gas from the A$11 billion Gorgon development.

"Securing commitments for 25 per cent of Gorgon production is a very significant step and increases confidence that a final investment decision on the Gorgon project will be taken in mid-2006," said Ian McKenzie, Shell's Perth-based general manager for government and public affairs.

The Gorgon joint venture, operated by 50 per cent stake holder ChevronTexaco, is completing negotiations for a A$30 billion deal to supply China's CNOOC with 80 million to 100 million tonnes of LNG over 25 years.

A Gorgon official said last week that the first delivery of Gorgon gas would be delayed at least a year to 2010 because of continuing discussions with CNOOC, parent of New York and Hong Kong-listed CNOOC Ltd.

McKenzie said Shell's LNG would be delivered to the Energia Costa Azul terminal on shore in northern Mexico, which is being built by Sempra and is due to receive its first gas in 2008.

The Gorgon gas would supply markets in Mexico and the US west coast.

Sempra and Shell each have 50 per cent of the terminal's 7.5 million tonnes-a-year capacity rights.

- REUTERS