EIG Global Energy Partners, a private equity firm that specializes in investments in energy infrastructure, agreed on Monday to pay Origin Energy Ltd $1.59 billion for a minority stake in Australia Pacific LNG Pty Limited, a joint venture with ConocoPhillips and Sinopec.
The liquefied natural gas (LNG) project is the largest by liquefaction capacity on Australia’s eastern seaboard and a major supplier of LNG to Asia and gas to Australia’s domestic market, the companies said. Located in Gladstone, Queensland, it holds an acreage position spanning the prolific Surat and Bowen basins, providing long-term reserves.
The project operates at globally competitive breakeven costs and is well positioned to meet growing LNG demand in the Asia-Pacific region, EIG said. After the deal closes, expected by the end of 2021, ownership of Australia Pacific LNG will consist of ConocoPhillips (37.5%), Origin (27.5%), Sinopec (25%) and EIG (10%).
The investment “reflects our strong confidence in the asset, our partners, and the importance of LNG as a critical enabler of the energy transition,” EIG CEO Blair Thomas said. “The transaction leverages EIG’s extensive experience in global LNG to deliver an attractive, steady stream of cash flows for our investors.”
EIG has invested in nine separate LNG projects located in six countries. The Australia Pacific LNG investment builds on EIG’s presence in Australia and provides the investor with a platform for future growth in global LNG, Thomas said.
Globally, gas stockpiles remain light following extreme weather this year, and power demand is ramping up in China and elsewhere in Asia. These developments, along with strong demand in Europe and South America, have fueled surges in global prices and demand for LNG exports.
Origin said the divestment will not change its role as upstream operator, responsible for the upstream exploration, development, and production activities. ConocoPhillips remains the downstream operator.
“Divesting a 10% interest allows Origin to crystallize some of the significant value we have created in Australia Pacific LNG, while retaining upside to further value creation through a continuing substantial shareholding,” said Origin CEO Frank Calabria.
Origin said it would use cash from the sale to pay down debt and investment in new growth opportunities.
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