China and Australia have signed an energy deal worth more than $40 billion — the largest trade deal ever between the two nations.
The deal comes after tensions rose between the Asia-Pacific powerhouses over recent Chinese bids for Australian commodities companies and the arrest of an Australian Rio Tinto executive in Shanghai. In Tuesday’s deal, China will receive liquefied natural gas from the Gorgon Gas Field off Australia’s west coast. Exxon Mobil, which has a 25 percent stake in the field, will provide gas to PetroChina for the next 20 years. Under the terms of the deal, more than two million tons of gas will be shipped each year. Martin Ferguson, Australia’s energy and resources minister, was in Beijing to witness the signing of the deal. Ferguson told reporters in Beijing it was the largest Sino-Australian trade deal. The timing may be seen as a way to smooth fractured relations between the two nations. Beijing recently voiced disapproval over Australia’s decision to give an exiled Uighur activist a visa to enter the country. In recent months, there have been riots in a Western Chinese province between ethnic Uighurs and Han Chinese. In July, four Rio Tinto employees in China — including Stern Hu, an Australian citizen of Chinese origin who is the general manager of Rio Tinto’s Shanghai office — were detained and subsequently arrested on charges of stealing state secrets. At the time, Rio Tinto was involved with iron ore pricing negotiations with China.
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In June, Rio Tinto broke off a more than $19 billion investment deal with China state-owned Chinalco. The deal with Chinalco had been signed in February and had been awaiting a review by Australia’s Foreign Investment Review Board. Australia has been an important provider of China’s growing demand for natural resources.
