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Gorgon deal ties Aust economic destiny to China

Thu Aug 20 00:15:31 EST 2009

CANBERRA, Aug 19 AAP - Australia's economic destiny will be tied to China for the next 20 years after a $50 billion gas deal left the massive Gorgon LNG project on the verge of development.

The $50 billion development of the Greater Gorgon gas fields off Western Australia is virtually assured after the signing of the deal with PetroChina.

It is the biggest ever trade deal in the nation's history and highlights the continuing importance of economic ties between Australia and China.

Prime Minister Kevin Rudd told parliament it was an important development for the nation's economic future.

The construction phase of the project is expected to create 6,000 jobs, while 3,500 people will be employed when the development is operational.

"This agreement will provide the basis for the creation of thousands of jobs and will also inject billions of dollars into our economy," Mr Rudd said.

"This announcement helps bring the Gorgon project to the verge of reality."

And the news may take the pressure off the federal government after it emerged this week that China had cancelled a high-level ministerial visit because Canberra granted a visa to exiled Uighur leader Rebiya Kadeer.

The detention of Rio Tinto executive Stern Hu has also caused underlying tensions between Canberra and Beijing.

Trade Minister Simon Crean told ABC TV that the deal was a sign that China needed Australia and vice versa.

"We need to stand tall (and) ... recognise our fundamental strength in the relationship," he said.

"China needs us. But we need China - and that's why we've got to do what we can to build, not just the relationship and not just the individual deals, but build a framework that's much more conducive to us going forward."

The opposition, however, is still taking issue with what it believes is Labor's mishandling of relations with China.

"The success of these commercial negotiations does not in any way absolve the Rudd government of responsibility for its mishandling of the government's relationship with (China)," opposition foreign affairs spokeswoman Julie Bishop said.

For much of the past two decades, China's demand for iron ore and coal has helped underpin the Australian mining boom.

And Mr Rudd says Gorgon and other liquefied natural gas (LNG) projects will herald the next chapter of Australia's successful resources story.

Gorgon is one of a number of LNG projects in the pipeline or being expanded across the nation.

"The global economic crisis notwithstanding, we are on the threshold of an unprecedented expansion of the LNG," Mr Rudd said.

"This government is providing every level of possible support it can to bring about these future great economic development opportunities for Australia."

While the deal is good news, the opposition is rankled because it believes Labor is trying to take all the credit for events a long time in development.

Liberal Barry Haase, who represents a vast mining region in WA, was kicked out of the House of Representatives after getting angry at comments Mr Crean made about the deal.

Opposition treasury spokesman Joe Hockey told reporters it was fiction to present the deal as the handiwork of the Rudd government.

Gorgon's joint venture partners - Chevron, ExxonMobil and Shell - are expected to make a decision on whether to give the project the go-ahead by the end of the year.

The only other hurdle is a tick-off by federal Environment Minister Peter Garrett, due before September 8.

The development involves sub-sea pipelines to Barrow Island, home to a range of endangered species not found on the mainland.

Species under threat include the flatback turtle, the spectacled hare-wallaby and the Barrow Island golden bandicoot.

Australian Greens senator Rachel Siewert, from WA, believes Mr Garrett's approval now will be nothing more than a rubber stamp.