The senior Manager of China National Offshore Oil Corporation (CNOOC), China's largest offshore oil corporation, said Monday that CNOOC's negotiation on Liquefied Natural Gas (LNG) in the Gorgon project in Australia is still under way.

Wu Zhenfang, vice president of CNOOC said at the China Gas Summit 2005 held in Beijing that the prospect of CNOOC importing LNG from the Chevron-lead Gorgon project is still good.

Chevron announced last week that CNOOC's preliminary agreement to buy 100 million tons of LNG from Gorgon project in 25 years had fallen through due to unresolved pricing and timing issues.

CNOOC signed a preliminary agreement to buy 30 billion Australian dollars (US$22 billion) of LNG from the Gorgon project in October 2003 along with a 12.5 percent stake in Australia's biggest untapped gas deposit.

Chevron has a 50 percent stake in the Gorgon project with ExxonMobil and Shell each holding a 25 percent share.

Also last week Chevron said in a statement that it had signed an agreement with Japan's Chubu Electric for the purchase of 1.5 million tons of Chevron's share of Gorgon LNG per year over 25 years commencing in 2010.

In October Chevron had announced it would sell 1.2 million tons of LNG a year to Tokyo Gas Co. Ltd. of Japan, starting in 2010.

So long as Gorgon gas field still has reserves and production capacity, CNOOC has opportunities to buy LNG from Gorgon,

"The most important thing is that both sides could deal at a proper price," he said.

According to Wu, the "proper price" will be surely higher than what the CNOOC has made in purchasing LNG in its projects in Guangdong and Fujiang provinces.

As Gorgon project has as many as three sharers and each sells its own share of gas, it cannot rule out the possibility for CNOOC to cooperate with the other two sharers except for Chevron, said Wu.

As for whether the CNOOC can still hold the 12.5 percent stake in the Gorgon project after it had lost the preliminarily-planed LNG supply, Wu said that it is still being negotiated.

CNOOC's annual demand for LNG will not be less than 2.7 million tons, the annual sum of Chubu Electric and Tokyo Gas, said Wu.

CNOOC's possible partners will not be confined to only Chevron or Gorgon. CNOOC would like to cooperate with any petroleum and gas companies in the world in line with market orders and economic rules, he said.

CNOOC will continue its steps in deploying its offshore LNG projects according to its original plan, said Wu.

As China's LNG project pioneer, CNOOC has signed long-term contracts to buy LNG from Australia and Indonesia respectively to feed its projects in Guangdong and Fujian.

The supplier for the LNG projects in East China's Zhejiang Province and Shanghai Municipality that CNOOC has already started is still under negotiation, according to Wu.

(Xinhua News Agency November 29, 2005)