From an initial contract of three million tonnes per annum Woodside has already expanded the agreement to 3.3 million tonnes and is currently in negotiations to increase that volume to 3.7 or even 4 million tonnes. First deliveries to China are expected in 2006.
Woodside is operator and one-sixth owner of the North West Shelf gas project offshore Western Australia, which is currently expanding by building a fourth LNG processing train.
Analysts expect that a fifth train, costing around $1.5 billion, may be needed to meet demand from China, though the venture has yet to approve the investment.
The neighbouring Gorgon field, to be operated by ChevronTexaco, is also planning LNG sales into China, and recently announced an agreement with the China National Offshore Oil Corp that is thought to surpass that of the NWS.
Gorgon only recently won conditional WA government approval to build an LNG processing plant on remote Barrow Island, which is still subject to a development commitment in 2005, the venture is due to begin exports in 2008.
The North West Shelf is an equal six-way joint venture comprising Woodside, BHP Billiton (BHP), Royal Dutch/Shell (RD), ChevronTexaco, BP Plc (BP), and Japan Australia LNG, itself an equal joint venture between Japan's Mitsubishi Corp. (J.MIB) and Mitsui & Co. (J.MIT).