Australian AGL agrees to sell North Queensland exploration gas assets

Major Australian energy retailer AGL is progressing with its plan to exit the exploration and production of natural gas with an announcement August 25 that it has agreed to sell its North Queensland assets.

The sale agreement is with a consortium of Chinese gas distribution company, Shandong, and Australian energy investment company, Orient Energy.

The assets comprise AGL’s 50% interest in each of the Moranbah Gas Project Joint Venture (MGPJV) and the North Queensland Energy Joint Venture (NQEJV) and AGL’s participation rights in the ATP1103 exploration licence located in the Bowen Basin.

The sale agreement is subject to pre-emptive rights with joint venture partner Arrow over the MGPJV and JQEJV assets.

AGL announced in February 2016 that it intended to exit the exploration and production of natural gas. At the time, it announced an impairment charge of A$640mn (US$505.75mn) after tax (A$795mn pre-tax) against the carrying value of its gas exploration and production assets, and cited volatility in commodity prices and long development lead times as the reasons for its decision to exit.

“AGL will provide further details of the financial outcome of the sale once it achieves financial close but does not expect any further impairments as a result of the sale of these assets,” AGL said August 25.

The announcement comes while AGL is assessing whether it will build an LNG import terminal in the state of Victoria. 

Nathan Richardson