ConocoPhillips has sanctioned a second 4.5 million metric ton per year production train for its Australia Pacific LNG (APLNG) coal seam gas to liquefied natural gas (LNG) project in Queensland, Australia.

"Sanctioning of the second train is the final step in the approval process for the project. From this point we are committed to the development and construction of all infrastructure and facilities to ensure the first delivery of LNG in 2015," said CEO Ryan Lance.

Sanction of the second train includes the further development of related upstream gas gathering and processing infrastructure as well as the construction of the second production train by Bechtel. Following the start up of the second train, the project has an anticipated peak production net to ConocoPhillips of 100,000-105,000 boe/d.

LNG exports from the second train are scheduled to commence in early 2016 under binding sales agreements to Sinopec Corp. and Kansai Electric Power Co. (Kansai Electric). "The approval of Sinopec Corp.'s additional subscription is testament to the strong growth market in China and the importance of Sinopec Corp. as a key partner," Lance said.

In April 2011, APLNG and Sinopec signed a sales agreement for 4.3 million metric tons per year of LNG for 20 years from mid-2015 and a subscription agreement in which Sinopec subscribed for a 15% equity interest in APLNG. The first train of the project was sanctioned in July 2011 (see Daily GPI, July 29, 2011), followed by the signing of a binding agreement with Kansai Electric in November 2011 for the sale and purchase of approximately 1 million metric tons per year of LNG for 20 years from 2016. An amendment of the sales agreement with Sinopec was signed last January, increasing its purchase to 7.6 million metric tons per year.

With sanction of the second train, the agreement for Sinopec to subscribe to an increased equity interest in the APLNG joint venture is now unconditional. Sinopec's ownership interest will increase from 15% to 25%, with ConocoPhillips' and Origin Energy's ownership interest each being reduced from 42.55 to 37.5%.

Last May Australian subsidiaries of Chevron Corp. and Apache Corp. and their partners agreed to sell LNG from the under-construction Chevron-operated Wheatstone Project in Western Australia to Japan's Tohoku Electric Power Co. Inc. (see Daily GPI, May 15). Separately last March, Australia's third LNG liquefaction and export facility was going online (see Daily GPI, March 23).

While the United States could very well become an LNG exporter, Australia's role in the global gas trade is only poised to grow, Santos CEO David Knox told attendees at IHS CeraWeek earlier this year (see Daily GPI, March 8). Australia's Santos, a major exploration and production company, has a stake in several of the country's approximately 12 LNG projects. By 2018, eight liquefaction projects under construction in Australia are expected to be online, making the country the world's largest exporter of LNG, Knox said. "Australia's significance in the global LNG marketplace is clearly expanding."

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