China National Oil Corp. (CNOOC) has agreed with BG Group to take an additional stake in the Queensland Curtis LNG (QCLNG) project in Australia for A$1.93 billion. CNOOC also agreed to take an additional 5 million tonnes per annum (mtpa) of LNG from BG Group. The deal will make BG Group the largest supplier of liquefied natural gas (LNG) to China, the company said.
CNOOC also is to reimburse BG Group for its share of spending on the project since Jan. 1, 2012.
“These agreements extend our strong relationship with CNOOC, which spans not only LNG but also exploration offshore China and production in the UK Continental Shelf through participation in the large Buzzard oil field,” said BG Group Chief Executive Chris Finlayson. “As a foundation partner in QCLNG, CNOOC was among the first to recognize the value and strategic importance of this world-first project — a vision that is now coming to fruition as we move towards first LNG in 2014.
“Combined with the 3.6 mtpa LNG sale agreement signed with CNOOC in 2010, BG Group now has total committed volumes to China of 8.6 mtpa, which will make the group the largest supplier of LNG to the world’s fastest growing energy market.”
China is the world’s fastest growing energy market, Finlayson said. The country is seen as the next prize in the global LNG end-user portfolio.
Among the agreements’ provisions, BG Group will sell certain interests in upstream coal seam gas tenements in Australia and a further equity stake in the QCLNG project Train 1 liquefaction facility for $1.93 billion and will supply CNOOC with a further 5 mtpa of LNG for 20 years beginning in 2015, sourced from BG Group’s global portfolio, the company said.
CNOOC will acquire a 40% equity interest in QCLNG Train 1, increasing its equity ownership from 10% to 50%, and CNOOC will acquire a 20% interest in the reserves and resources of certain BG Group tenements in the Walloons Fairway region of the Surat Basin, Queensland, increasing its ownership from 5% to 25%.
BG Group’s Australian business QGC Pty Ltd. remains operator and retains majority ownership of the QCLNG project. Closing is expected by the end of the year.
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