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Timetable set for gas terminal bid

CALIFORNIA Governor Arnold Schwarzenegger could make a final decision as early as July on BHP-Billiton's controversial $US4 billion ($5.3 billion) gas terminal proposal.

Australia's federal industry minister Ian Macfarlane revealed the timetable after attending an "encouraging" meeting with two key Schwarzenegger government officials in the California capital Sacramento.

The project, which involves shipping Australian liquefied natural gas (LNG) to the terminal, before piping it to Los Angeles, would be worth $15 billion in export dollars for Australia.

The July date was the first official declaration from the California government of a time frame for a decision on the proposed BHP-Billiton gas terminal, to be built 23km off the coast of Los Angeles.

California cabinet secretary Terry Tamminen and secretary of resources Mike Chrisman told Mr Macfarlane in Sacramento that two significant reports would have to be completed before Mr Schwarzenegger gave a green light or killed off the BHP-Billiton proposal.

One report will examine what California's energy import needs will be going forward.

The second will examine public concerns such as environmental issues.

The BHP-Billiton platform has caused some controversy in Los Angeles with several coastal councils and residents groups opposing the plan.

"The governor has to sign off on the terminal ... if it went well, you'd say six months (for a final decision)," Mr Macfarlane said before flying to South Korea today for the third and final leg of his tour.

"If it goes the way people expect, then it would probably take eight to nine months. If it goes badly, who knows.

"But certainly towards the third quarter of this year."

Mr Chrisman, gave support for an Australian partnership at a luncheon in Los Angeles on Tuesday.

"Mike's statement in Santa Monica was the first public acknowledgment by the Californian administration that they will have to import natural gas from overseas or they expect to import natural gas from overseas," Mr Macfarlane said.

He said the most "dramatic response" he received during the trip so far was in Mexico where soaring energy demands were putting pressure on the country's US exports.

Mr Macfarlane said the trip to Mexico revealed that country's future energy demands might be so strong that there would not be enough gas to go to California.

He said this would increase the need for the BHP-Billiton proposal and a similar terminal in southern California waters put forward by another Australian energy giant, Woodside.

"It's obvious their energy demands are going to increase quite dramatically and the solution as far as (Mexican Energy Minister Fernando) Elizondo is concerned is going to come from the importation of LNG," Mr Macfarlane said.

Meanwhile, he said South Korean leg of his tour came at a crucial time, as increased gas prices forced that country's government to seek long-term gas contracts to fuel power stations.

"Our aim is to convince the Koreans that if you want reliable gas from a stable government and a good ally of Korea, it is obviously Australia," he said.

In the past Korea has bought spot cargoes from Australia, but this is changing as the demand for LNG dramatically increases.

"They are now looking to do the Japanese and Chinese thing and take out a long-term contract, which is why this one is so important," Mr Macfarlane said.

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