Australia and China in $50 billion gas deal, Qantas profit plummets 87%: Economy roundup

Australia and China have now agreed to the two countries’ biggest ever trade deal, with Exxon Mobil and PetroChina signing a $50 billion liquefied natural gas deal.

“It’s a statement about the nature of our two economies and the fact that Australia is important to China, just like China is important to Australia,” Australian Resources Minister Martin Ferguson told Reuters from Beijing.

The deal will see Exxon supply LNG from the $50 billion Gorgon LNG project on the northwest coast, expected to contain 15 million tonnes per year at its peak of production.

Chevron will operate the project with a 50% stake, with Exxon and Royal Dutch Shell also owning a 25% stake each. Additionally, PetroChina will become the biggest buyer of gas from Gorgon over the next 20 years.

“The $50 billion contract to supply PetroChina is a foundation contract that will assist in getting the Gorgon LNG project to final investment, and that again would represent the biggest stand-alone project in Australia’s history,” Ferguson said.

Meanwhile, the Australian share market has opened higher today after good retail results from the US helped push the market upwards.

The benchmark S&P/ASX200 index was up 36.2 points or 0.83% to 4417.8 at 12.10 AEST. The Australian dollar also gained ground, moving up to US82c.

Commonwealth Bank shares rose 1% to $45.77, with Westpac shares also gaining 0.1% to $23.77. ANZ lost 0.4% to $20.28, with AMP also gaining 1.5% to $5.91.

Qantas profit plummets 87%

Qantas Airways has recorded an 87.9% decline in net profit for the 2008-09 financial year, falling to $117 million due to lower passenger volumes. Pre-tax profit fell 87% to $181 million.

“There are signs of an improvement in passenger volumes. In addition, yields have stabilised at the levels experienced in the second half of the 2009 financial year,” Qantas chief executive Alan Joyce said.

“High levels of volatility in the economic outlook, industry capacity, passenger demand, fuel prices and exchange rates continue. Given the high level of uncertainty, it is not possible to provide any profit guidance.”

The Bank of Queensland has now launched a $340 million capital raising in order to strengthen its balance sheet, and has also updated its financial forecasts, expecting a 20% rise in normalised cash net profit.

“This equity raising will provide the bank with a strong capital position for the medium term and allow BOQ to take advantage of emerging growth opportunities,” BOQ managing director and chief executive David Liddy said in a statement to the ASX.

Meanwhile, Origin Energy now expects a 15% jump in profit during 2010 after recording profit of $530 million for the 2008-09 financial year. Managing director Grant King said in a statement that Origin had started 2008-09 well placed to continue its growth.

“Based on current market conditions, Origin expects the underlying profit for the 2010 financial year to be around 15% higher than the prior year,” he said.

Wall Street gains on positive retail data

In the US, Wall Street recorded positive results after retail giants Home Depot, Target and Saks recorded modest growth in revenue, boosting investors’ confidence.

The Dow Jones industrial average moved up 82.60 points, or 0.90%, to 9217.94.

Also overseas, the chief economist of the International Monetary Fund has said in an article that the global economic recovery is beginning, but challenges still remain.

“The turnaround will not be simple,” Olivier Blanchard said. “The crisis has left deep scars, which will affect both supply and demand for many years to come.”

“From the point of view of the United States, a decrease in China’s current account surplus would help increase demand and sustain the US recovery,” he said. “That would result in more US imports which would help sustain world recovery.”