(EnergyAsia, May 16 2012, Wednesday) — Australia’s Origin Energy Ltd said it has agreed to sell some of its vast coal seam gas reserves in Queensland state to a Santos-led consortium developing the nearby rival Gladstone project to export liquefied natural gas (LNG) to Asia.

Origin Energy is developing its gas reserves for an export-oriented LNG project by establshing the Australia Pacific LNG Pty Ltd with US ConocoPhillips and China Petroleum and Chemical Corp (Sinopec).

Santos operates the Gladstone LNG (GLNG) consortium with France’s Total SA, Korea Gas Corp (Kogas) and Malaysia’s state energy firm Petronas, with plans to produce 7.8 million tonnes of LNG a year for export to Asia.

Origin Energy has a substantial reserves position with access to more than 2,500 PJe of contract rights and uncontracted 3P equity gas reserves. Origin also possesses gas development options on Australia’s east coast including Ironbark (Queensland) and Halladale/Blackwatch (Victoria).

In a statement, Origin Energy said the agreement will enable it to monetise its portfolio of fuel resources in line with international oil-linked pricing.

The Sydney-based company will supply GLNG with 365 petajoules (PJ) of gas or 100 terajoules (TJ) per day over 10 years at Wallumbilla starting 2015.

While it did not disclose the price, Origin said it has the option to take back 1.825 petajoules of gas a year during periods of high domestic gas or electricity demand.

Origin Energy’s managing director, Grant King, said: “The gas sales agreement with GLNG will deliver significant value to Origin, opening an export channel to market for our legacy fuel reserves and allowing a more rapid monetisation of the resource in line with international oil-linked pricing.

“The transaction demonstrates the strength and value inherent in Origin’s diverse and flexible portfolio of physical and contracted fuel resources, which has positioned the company to capitalise on the growing demand for gas in the energy markets of Asia.

“Gas demand in eastern Australia is expected to triple over the next five years and Origin continues to invest in exploration and development in anticipation of this growth.”

Santos CEO David Knox said the agreement delivers on the company’s strategy of creating shareholder value by executing the most efficient gas supply plan for GLNG.