china and ng - ref, page-11

SF,

Imho the possibilities are wide open, but am doubting Indian companies. ONGC and GAIL are too controlled by govt to successfully win in the cut and thrust of competitive bids. The time for the Indians is yet to come imo.

The IOCs are keen on gas, as they can't get access to the the best oil (except deepwater), and recently the major IOCs have gone for unconventional gas (Qld csg and US shale gas), but only really in the last couple of years. Exxon, Shell and BG have certainly taken to US shale gas, and we know Shell,CP and BG have Qld csg.

Until now the only NOC that I am aware of to take a major interest in unconventional gas has been Petronas with STO. In many ways this interest by Petrochina could be the start of a new round of interest in Qld csg, from the NOCs.

The smart IOCs got in cheap, into a little known resource (grossly undervalued by the local scathing insto/broker/journo clique) before the NOCs got onto it, knowing that once the NOCs with their strategic interests started bidding for it, they wouldn't be able to compete (and still get their 15+ % returns on investment).

Compared with deep water gas off WA, QLd csg must be starting to look easy for the NOCs to get their heads around. csg gathering is very manufacturing (or rather agricultural) compared to deepwater with very sophisticated skills plus issues with platform location, flow assurance, often high CO2, complex JVs, permitting hassles for onshore plant (rock paintings, turtles etc). Look at the hassles INPEX has had, Gorgon, Sunrise and Browse. Then can you get the workers to the Pilbara. Gladstone is a breeze.

This is last chance for the IOCs imho. Petrochina may be flagging the start of the NOC wave, which will surely end on much higher prices.

Not suggesting anyone go out and buy AOE on bid inflating prices, just suggesting you ain't seen real inflation yet, and that if you are prepared to be patient (maybe even another couple of years) you aren't going to see resources at these prices. Hold what you can, of the best quality you can, for as long as you can imho.

As I said a couple of weeks ago, GAS GLUT BEGONE. New Qatar is only in gestation. The capital that is going to go into development is still an order of magnitude greater than what you can still buy the resource for.

EL