British Gas (BG) Group said yesterday that it has signed a heads of agreement document to sell interests in a liquefied natural gas (LNG) project in Australia to China National Offshore Oil Corporation (CNOOC) for USD 1.93 billion.
The full transaction agreement is expected during the first half of next year. CNOOC will reimburse BG for its share of the Queensland Curtis LNG (QCLNG) project capital expenditures incurred from 1 January. This and other recently announced sales and divestitures by BG amounts to USD 7.6 billion by the middle of next year, reflecting the company’s efforts to streamline its portfolio.
Interests involved in the QCLNG project deal include certain upstream tenements and the Train 1 liquefaction facility, but exclude the Train 2 liquefaction facility, transmission pipeline, and the project's common facilities. First LNG from the project is expected in 2014.
The heads of agreement transaction stipulates:
- CNOOC will acquire a 40% interest in the facility’s Train 1, increasing its equity ownership from 10% to 50%
- The Chinese company will acquire a 20% stake in the reserves and resources of certain BG assets in the Walloons Fairway region of the Surat Basin in Queensland, thereby increasing its share from 5% to 25%
- CNOOC will acquire a 25% interest in certain upstream assets held by BG in Queensland’s Bowen Basin
- The two companies will jointly invest in the construction of two LNG ships in China, adding to the two ships already committed under their 2010 LNG agreements
- CNOOC will have the option to participate as a 25% partner in the first of any potential expansion trains at the facility
BG’s Australian business QGC will retain operatorship and majority ownership of the QCLNG project. BG Group will retain:
- About 74% of its original interest in the upstream resource and related infrastructure
- 100% of the project’s common facilities such as LNG tanks and a jetty on Curtis Island, and the 540 km natural gas pipeline network linking the gas fields to the project, which comprise about 30% of the estimated 2011–2014 project spend
BG said also it agreed to provide CNOOC with an additional 5 MTPA of LNG for 20 years beginning in 2015. Combined with the 3.6 MTPA sale agreement signed between the two companies in 2010, the company’s total committed LNG sales to China are 8.6 MTPA, making it the largest supplier of LNG to China.