BG signs LNG deal with CNOOC based on CSM feedstock

China's CNOOC signed a contract with the UK's BG to buy 3.6 million tonnes/year of LNG from the Queensland Curtis Island coalseam methane-LNG project proposed for Gladstone.

May 14, 2009

Rick Wilkinson
OGJ Correspondent

MELBOURNE, May 14 -- China National Offshore Oil Corp. has signed a contract with the UK's BG Group to buy 3.6 million tonnes/year of LNG from the Queensland Curtis Island coalseam methane-LNG project proposed for Gladstone.

The contract will run for 20 years. CNOOC also will purchase 5% of BG's interest in the reserves and resources of some permits in the Walloon Coal Seams fairway in the Surat basin of Queensland.

CNOOC also will become a 10% equity investor in one of the two liquefaction trains forming the first phase of the Curtis Island project.

In addition BG and CNOOC have agreed to jointly participate in a consortium formed to construct two LNG carriers in China.

The CSM-LNG project is being developed by Queensland Gas Co., recently taken over by BG. It will produce 7.5 million tpy of LNG in the first development phase. A second phase will take production to 12 million tpy.

Final investment decision on the project is expected in 2010 with first LNG shipments in 2014.