Is there a better China/resource play in Australia than Woodside Petroleum (ASX:WPL)?
Yesterday Woodside announced the largest export deal in Australian history. It will sell up to AU$45 billion in liquefied natural gas (LNG) to China’s leading energy producer, PetroChina. If you’re scoring at home, that’s AU$55 billion worth of deals between Australian and Chinese companies signed at the APEC summit.
Keep in mind that two-trade between the countries was AU$50 billion…for all of last year. That was a 20% increase over the year before, and makes China Australia’s largest trading partner, eclipsing Japan and Team America.
In one giant burp of gas, Woodside has nearly equalled all of last year’s two-way trade. How much more gas is left in Woodside’s North West Shelf projects? And who will get it; the Chinese or the Japanese? We don’t mind saying Woodside is a core recommendation in Outstanding Investments, where we’re updating the story regularly.
A few months ago we suggested changing Western Australia’s name to New South Shanghai. It could be an honorary southern province of China. Or, if Australia adopts Gina Rinehart’s suggestion for two-year Dubai-style temporary worker visas, the whole place could boom with imported Chinese labour digging up WA’s iron ore and gold for export to China and India (with the profits going to Aussie shareholders via superannuation, of course).
We were joking, for the most part. The New South Shanghai Eagles wouldn’t fit on a footy scarf now would it? But WA’s labour crunch is a big problem that can only be solved through lower resource prices (layoffs), increased productivity or a guest worker program to supplement the Australian workforce.
Dan Denning
The Daily Reckoning Australia
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About the Author
Dan Denning is the author of 2005's best-selling The Bull Hunter (John Wiley & Sons). He began his financial publishing career in 1997 and has covered financial markets form Baltimore, Paris, London and, beginning in 2005 Melbourne. He’s the editor of The Daily Reckoning Australia and the Publisher of Port Phillip Publishing.
