SHENZHEN, June 28 — Australian prime minister John Howard reiterated Australia “would not welsh” on its AUS$25 billion liquefied natural gas (LNG) contract with China, despite the price of gas increasing significantly since the deal was struck two years ago.
However, he said the price of future deals would “depend on the forces of supply and demand at the time the deals are negotiated. An excerpt from a television interview is below:
JOHN TAYLOR (ABC): You sent a clear message that the first LNG deal should stand as it is – “Australians don’t welsh on contracts,” was what you said.
Were you worried that any change or pressure to renegotiate this contract to jeopardise future energy deals between Australia and China?
JOHN HOWARD: No, I was responding to a particular question and I was making the obvious point that sanctity of contract is a very important thing in commercial dealings.
If parties agree to vary the terms of a contract, well you’re not welshing on it, but I was making the obvious point that sanctity of contract is very important and these are matters for the parties.
I don’t determine price, all I do as best I can as Prime Minister is to create a congenial environment where the goodwill and the assurance of government support and understanding enables people to make deals that suit both of them.
JOHN TAYLOR: Do you expect future LNG or energy deals to be at a better rate, a higher price than this first?
JOHN HOWARD: Well, that is a matter for the parties and it will depend upon the forces of supply and demand at the time the deals are negotiated.