BG to sell Queensland Curtis LNG stake to CNOOC

BG Group has signed a heads of agreement to sell interests in the Queensland Curtis LNG project in Australia to China National Offshore Oil Corp. for $1.93 billion and the sale of LNG.

The interests include a stake in upstream assets and in the first of two planned liquefaction trains, which are to produce LNG at an initial rate of 8.5 million tonnes/year (tpy) from gas produced from Surat basin coal seams in southern Queensland (OGJ Online, Apr. 11, 2011). The deal excludes any interest in the second LNG train, transmission pipeline, and common facilities.

The companies have agreed that BG will supply CNOOC with 5 million tpy of LNG for 20 years beginning in 2015 from its global assets. In March 2010, BG signed an agreement to supply CNOOC 3.6 million tpy of LNG.

Under the new agreement, CNOOC will acquire a 40% equity interest in the first Queensland Curtis LNG train, in which it already holds 10%. It also will acquire a 20% equity interest in BG holdings in the Walloons Fairway region of the Surat basin, in which it now holds 5%. The Chinese company also will acquire a 25% working interest in BG upstream assets in the Bowen basin of Queensland.

BG and CNOOC further agreed to jointly invest in the construction of two LNG vessels in China. The companies committed to construction of two other LNG ships in their 2010 agreement.

CNOOC, under the new agreement, will receive the option to participate as a 25% partner in the first of any expansion trains at the Queensland Curtis LNG project.

BG’s QGC Pty Ltd. remains operator and majority owner of the LNG project.

BG retains about 74% of its original interest in the upstream resource and related infrastructure, 100% of the common facilities on Curtis Island, such as LNG tanks and the jetty, and a 540-km gas pipeline network linking gas fields with Curtis Island.

BG said the common facilities and pipeline represent about 30% of estimated spending between 2011 and when LNG production is projected to start in 2014.

To access this Article, go to: