News World Controversial Chinese-owned company gets multimillion-dollar gas grant

Controversial Chinese-owned company gets multimillion-dollar gas grant

China gas grant
Ye Cheng (L) and Mike Hughes (R) sign the Westside deal in 2014. Photo: ABC
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The Federal Government has awarded a $6 million grant to a gas producer wholly-owned by a massive Chinese company said to have close links to the country’s communist party.

Federal Resources Minister Matt Canavan announced grants to Westside Corporation and three other gas firms last month under the Government’s Gas Acceleration Program (GAP), which was established to help develop and secure domestic gas supplies.

But a government grants specialist says under the grant agreement there is nothing stopping the company sending the gas it taps overseas.

Company is ‘favoured son’ to China’s Communist Party

Westside is part of the Chinese-owned Landbridge Group, which also has the controversial 99-year lease on Darwin Port, a deal that angered the Obama administration when it was struck in 2015.

Landbridge’s founder and chairman is Chinese billionaire Ye Cheng, who is a member of China’s People’s Political Consultative Conference (CPPCC).

At a 2015 Senate hearing, Landbridge director Mike Hughes denied that Mr Cheng was a member of the Communist Party.

China gas grant
President of Landbridge Group with China’s President Xi Jinping in Australia in 2014. Photo: ABC

“He is a member of the CPPCC,” Mr Hughes said.

“It is an advisory body to the parliament. I believe it has something over 2,000 delegates.”

A Westside spokesman told the ABC: “Landbridge is a private Chinese company and is not state-owned.”

But the executive director of the Australian Strategic Policy Institute (ASPI), Peter Jennings, claims Landbridge is close to the ruling party in Beijing.

“You have to work on the basis that Landbridge is really acting as an arm of the Chinese Government when it makes its big foreign investment decisions overseas,” he said.

Mr Jennings said Landbridge gets access to concessional loans from Chinese banks “because it is a favoured son of the Chinese political system”.

“There is reach back to the Chinese Communist Party and to the Chinese intelligence apparatus, and that’s something that we should be concerned about,” he said.

“[This] should have led to some closer due diligence on the part of the Australian authorities in assessing whether or not this was an appropriate company to provide that $6 million incentive.”

Immediately after leaving Parliament in 2016, former Australian trade minister Andrew Robb went to work for Landbridge on an $880,000 salary as a “high-level economic consultant”.

Last year, Fairfax obtained a letter outlining Mr Robb’s consultancy agreement.

It revealed that as well as Landbridge, Mr Robb would also be engaged by Westside as a consultant.

Westside sells gas for Asian exports

The $6 million in federal money granted to Westside is to fast-track the drilling of 10 gas wells at the company’s Greater Meridian Fields in Queensland’s Bowen Basin, bringing forward the already planned wells by one year to 2020.

ASX-listed companies Armour Energy and Beach Energy, and US-owned venture Tri-Star Fairfields were also awarded $6 million each to develop new wells.

When the Government awarded the grants last month under its Gas Acceleration Program it said the money would be part of a push to “accelerate the development of onshore Australian gas resources to improve supplies to domestic gas consumers”.

But Landbridge’s Chinese website said “at present, natural gas produced by Westside Corporation Limited is ultimately shipped to South East Asia predominantly”.

“Westside Corporation Limited is actively looking for additional oil and gas assets to provide additional opportunities for the [Landbridge] Group to input resources into the Chinese market,” the website states.

However, Landbridge’s Australian website states that it supplies both the domestic and international markets.

“None of the gas from these 10 wells will be supplied to international markets,” a Westside spokesman said.

“Westside will be signing a formal agreement with the Government over the coming weeks. The drilling of these wells will commence later this year.”

Westside has a 20-year binding gas sales agreement to provide up to 65 Terajoules a day from its Meridian fields to the Gladstone Liquified Natural Gas (GLNG) project.

“Currently 100 per cent of Westside’s gas is sold to GLNG, in a contract that was signed in 2014,” the Westside spokesman said.

“Whether it is then exported is a matter for GLNG and over which Westside has no control.”