BG Group, CNOOC Sign QCLNG Related Deals

BG Group said on Monday that it has agreed to sell additional stake in the Queensland Curtis LNG (QCLNG) project in Australia to China National Offshore Oil Corporation (CNOOC). Additionally, CNOOC will reimburse BG Group for its share of QCLNG project expenditure incurred from 1 January 2012.

The company will also supply additional 5 million tonnes per annum of liquefied natural gas (LNG) for a period of 20 years beginning in 2015, sourced from the Group’s global portfolio.

Combined with the 3.6 million tonnes per annum (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, BG said.

BG Group has signed long-term LNG sales contracts with customers in China, Japan and India will soon begin importing LNG into Singapore through its position as sole gas market aggregator.

Under the terms of the agreements:

• 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;
• BG Group will supply CNOOC with a further 5 mtpa of LNG for 20 years beginning in 2015, sourced from the Group’s global portfolio;
• CNOOC will acquire a 40% equity interest in QCLNG Train 1, increasing its equity ownership from 10% to 50%;
• 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%;
• CNOOC will acquire a 25% equity interest in certain other upstream tenements held by BG Group in the Surat and Bowen Basins, Queensland;
• BG Group and CNOOC will jointly invest in the construction of two LNG ships in China, adding to the two ships already committed under the LNG agreements signed in March 2010; and
• CNOOC will have the option to participate up to 25% in one of the potential expansion trains at QCLNG.

The agreements exclude any interest in the Train 2 liquefaction facility, transmission pipeline and QCLNG project common facilities.

Completion of the transaction is expected by the end of the year, subject to government, regulatory and other relevant approvals and to the finalising and execution of certain other related documentation.