Australia Pacific to Proceed on CGS Based LNG Project

Australia Pacific LNG, the joint venture between Origin Energy and ConocoPhillips, has approved the first stage of development (FID) for its $20 billion coalseam gas-based LNG project on Curtis Island in the eastern state of Queensland.

The project will initially involve the development of a first 4.5 million mt/year LNG production train and infrastructure to support a second train. The first phase of the project will cost $14 billion, according to the company.

The approval triggers further development and production of Australia Pacific LNG's coalseam fields in regional Queensland, the construction of a gas transmission pipeline, and the construction of the LNG facilities and associated export infrastructure on Curtis Island in the port city of Gladstone.

Origin will operate the upstream operations. ConocoPhillips, which already operates a 3.6 million mt/year LNG plant in the northern Australian city of Darwin, will be responsible for the downstream facilities.

"The FID for this first phase provides an economically attractive project and allows all the synergies of a two-train project to be captured once further offtake agreements are finalized," Origin Energy Managing Director Grant King said.

Australia Pacific LNG said it was well positioned to progress to a full two-train project, which would have a capacity of 9 million mt/year and cost a total of $20 billion. The company noted that discussions with potential customers for volumes from the second train are well advanced.

First gas from train one is expected in mid-2015. Train two is scheduled to start up in early 2016. The first LNG train will service Australia Pacific LNG's 20-year sales and purchase agreement with China Petroleum & Chemical Corp.

In April, Australia Pacific LNG agreed to supply Sinopec with 4.3 million mt per year from the project. Also, Sinopec agreed to pay $1.5 billion for a 15% equity interest in the Australia Pacific LNG joint venture, with the shares held by Origin and ConocoPhillips set to reduce to 42.5%. That deal is now unconditional and is expected to be completed shortly.