(EnergyAsia, November 1 2012, Wednesday) — UK’s BG Group said it has agreed to sell to China National Offshore Oil Corporation (CNOOC) some of its interests in the Queensland Curtis LNG (QCLNG) project in Australia for US$1.93 billion and additional liquefied natural gas (LNG) supply from its global portfolio.
The agreements are expected to be executed in the first half of 2013, and upon closing, CNOOC will reimburse BG Group for its share of QCLNG project capital expenditures incurred from January 1 this year.
The interests conveyed include a stake in certain upstream tenements and the Train 1 liquefaction facility, transmission pipeline and QCLNG common facilities.
The other major aspects of the deal, subject to regulatory approvals, are:
- CNOOC will acquire a 40% equity interest in QCLNG Train 1, increasing its equity ownership from 10% to 50%;
- CNOOC will acquire a 20% equity interest in the reserves and resources of certain BG Group tenements in the Walloons Fairway region of the Surat Basin, Queensland, increasing its equity ownership from 5% to 25%;
- CNOOC will acquire a 25% working interest in certain upstream tenements held by BG Group in the Bowen Basin, Queensland;
- BG Group and CNOOC will jointly invest in the construction of two LNG ships in China, adding to the two ships already committed under the LNG agreements signed in March 2010; and,
- CNOOC will have the option to participate as a 25% partner in the first of any potential expansion trains at QCLNG.
BG Group said its Australian business QGC Pty Limited will remain operator and retain majority ownership of the QCLNG project.
BG Group said it will also retain around 74% of its original interest in the upstream resource and related infrastructure, and 100% of the project’s common facilities on Curtis Island (LNG tanks, jetty) and the 540 kilometre natural gas pipeline network linking the gas fields to Curtis Island, which together represent approximately 30% of the estimated 2011-2014 project spend.
Under the LNG sale agreement, BG Group will supply CNOOC five million tonnes per year (mtpa) of LNG for 20 years beginning in 2015.
Combined with the earlier 3.6 mtpa LNG sale agreement signed with CNOOC in March 2010, BG Group said it now has secured a total of 8.6 mtpa of committed LNG sales to China, making the UK gas giant the largest supplier of LNG to the world’s fastest growing energy market.
BG Group chief executive Frank Chapman said:
“This agreement will substantially increase our partnership with CNOOC in the QCLNG project. The new LNG sales agreement will also enhance our close relationship with CNOOC by providing material new supplies of natural gas to China. We look forward to building our partnership with CNOOC as we progress towards first LNG from the QCLNG project in 2014.
“Equally significant is that this transaction, combined with others recently announced, will provide for an aggregate capital release of US$7.6 billion by mid-2013, exceeding the portfolio rationalisation plans we announced in February this year.
“This progress reflects our commitment to maintain a strong balance sheet and credit rating.”