(EnergyAsia, December 10 2014, Wednesday) — BG Group plc, a world leading UK-based upstream and liquefied natural gas (LNG) company, said it has agreed to sell its wholly-owned Australian subsidiary QCLNG Pipeline Pty Ltd for US$5 billion as part of its divestment of non-core assets.

The buyer, APA Group, owns and operates Australia’s largest gas infrastructure business.

QCLNG Pipeline Pty Ltd owns a 543-km large-diameter underground pipeline network linking BG Group’s natural gas fields in southern Queensland to a two-train LNG export facility at Gladstone on Australia’s east coast. BG said the pipeline, constructed between 2011 and 2014, has a book value of US$1.6 billion.

The sale is conditional on the start of commercial LNG deliveries after the start-up of the QCLNG export plant at Gladstone and on partner consent. BG Group and its partners have firm capacity rights in the pipeline for 20 years, with options to extend.

BG Group said it expects to earn a post-tax profit of US$2.7 billion on the transaction following the transaction’s expected completion in the first half of 2015. The profit will be partly offset by a post-tax impairment of around US$2 billion of the company’s remaining QCLNG assets.

BG said it expects APA to earn approximately US$390 million for the year ended December 31 2016 based on tariffs set to provide a fixed rate of return on the asset’s primary components escalating annually with US inflation indices.

Andrew Gould, BG Group’s interim executive chairman, said:

“The sale of the QCLNG pipeline is in line with our strategy to focus on BG Group’s core areas of oil and gas exploration and production and LNG. The timing reflects QCLNG’s advanced stage of development. We are on the verge of delivering the world’s first large-scale project using natural gas from coal seams as a feedstock for LNG.”