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August 27, 2009

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China closer to huge gas deal

AUSTRALIA gave final approval yesterday for development of a natural gas field that will export an estimated US$41 billion in energy to China over 20 years.

Environment Minister Peter Garrett said Gorgon gas field operator Chevron Corp had agreed to meet the 28 environmental conditions he had set for the development of the gas field off northwestern Australia.

One or more offshore drilling rigs will pipe gas to a processing plant on Barrow Island, a nature reserve, where Garrett said developers must safeguard rare flat-back turtles that nest on the island.

"My expectation is that the company will be more than willing to meet these conditions," Garrett told reporters. "There is agreement on the basis of the conditions that I put forward and I welcome that."

The environmental approval was the final hurdle for the gas field's development.

PetroChina Co, Asia's largest oil and gas company, agreed last week to buy 2.25 million tons of liquefied natural gas per year from the yet-to-be developed gas field, in Australia's biggest export deal.

The contract gives a huge boost to the Gorgon project, which is being developed by Australian units of global energy companies Chevron, ExxonMobil Corp and Royal Dutch Shell.

Chevron is a 50 percent stakeholder.

Chevron Australia General Manager Colin Beckett welcomed the environmental approval but added that it would be several weeks before the venture partners make a final decision on whether to proceed.

The environmental conditions are consistent with those imposed recently by state government authorities and have already been factored into the project planning, Beckett said.

Environmental groups have condemned the decision to allow the development on Barrow Island. They argue that the gas should be piped to a mainland plant.

"We don't think there are conditions that will allow for both a safe operating environment and will allow for a safe future for the flat-back turtles," World Wildlife Fund-Australia conservation manager Gilly Llewellyn told ABC television.


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