Rick Wilkinson
OGJ Correspondent
MELBOURNE, Mar. 17 -- Liquefied Natural Gas Ltd., Perth, extended its heads of agreement with Brisbane-based Arrow Energy Ltd. for the proposed production of Fisherman’s Landing coalseam methane (CSM) to a LNG plant in Gladstone, Qld., until the end of June.
LNG Ltd. said this is to keep its options open in the event the sale is cancelled.
Both LNG Ltd. and Arrow have amended the agreement to a nonexclusive arrangement that can be terminated by either party with a 1-day written notice. Termination will not incur any liability on either party.
The original sale agreement, announced in February, was for Arrow to acquire Fisherman’s Landing from LNG Ltd. for $168 million (Aus.), which included an up-front payment of $51 million (Aus.) in cash and options.
The change occurred because of the recent takeover bid for Arrow by Royal Dutch Shell PLC and PetroChina. Some sources said the bidders don’t want to proceed with the LNG plant and would prefer to reserve Arrow’s CSM resources for Shell’s own planned CSM-to-LNG plant.
Consequently LNG Ltd. made the agreement adjustment to appraise other opportunities to develop Fisherman’s Landing.
All early site works were placed on hold until the proposed sale to Arrow is clarified or LNG Ltd. enters alternative gas supply and project structure agreements with other parties.