ConocoPhillips, Houston, plans to become upstream operator of Australia Pacific LNG (APLNG) following closing of a separate deal between EIG and Origin Energy Ltd., Sydney, the company said in a release Mar. 27.
An integrated LNG project with an established liquefaction plant, APLNG is the largest LNG project by liquefaction capacity on Australia’s eastern seaboard and a major supplier of LNG to Asia and gas to Australia’s domestic market, meeting 20-30% of its total demand. The project, in Gladstone, Queensland, holds nameplate capacity of 9 million tonnes/year and holds a large acreage position spanning the Surat and Bowen basins.
ConocoPhillips is the current downstream operator and holds 47.5% interest after acquiring an additional 10% interest for $1.645 billion from Origin Energy in February 2022. In that deal, the company exercised its preemption right following EIG’s attempt to acquire additional project interest (OGJ Online, Feb. 18, 2022).
In addition to upstream operatorship, the company intends to acquire up to an additional 2.49% interest in APLNG for $500 million, subject to customary adjustments, the company said, bringing its share to up to 49.99% upon closing.
ConocoPhillips’ full-year 2022 production from APLNG was about 136,000 boe/d.
EIG, Origin Energy deal
On Mar. 27, a consortium of Brookfield Renewable Partners and MidOcean Energy—an EIG-company—signed a binding agreement to acquire Origin Energy, Australia’s largest integrated power generator and energy retailer, in a deal that puts Origin Energy's enterprise value at $18.7 billion.
The agreement follows the takeover offer received by Origin Energy from Canadian private equity company Brookfield Asset Management in conjunction with EIG in November 2022 and a revised proposal in February (OGJ Online, Nov. 10, 2022). Origin Energy holds a 24% market share of Australia’s electricity market and 27.5% interest in APLNG.
MidOcean Energy is an EIG-formed LNG company that will acquire Origin’s integrated gas business, which includes the interest in APLNG. Brookfield will own Origin Energy's energy markets business. ConocoPhillips agreed to acquire the additional APLNG interest from MidOcean, which recently entered into a definitive agreement with Tokyo Gas to purchase interests in four operating Australian LNG projects (OGJ Online, Oct. 10, 2022).
Both the assumption of upstream operatorship and the shareholding acquisition are dependent on EIG closing its transaction with Origin Energy. Both are subject to Australian regulatory approvals and other customary closing conditions. The ConocoPhillips deal is expected to close in early 2024.