A major LNG deal has been signed between the Britain’s BG Group and China National Offshore Oil Corporation (CNOOC) which will stretch over two decades and encompass a comprehensive gas partnership. CNOOC will purchase 3.6 million tonnes per annum (mtpa) of LNG for a period of 20 years from the start-up of a Queensland LNG project, offshore Australia which is being developed by QGC – a BG Group business.
Production and export from the Queensland Curtis LNG project is expected to start-up in 2014.
CNOOC has committed to purchasing 5% of BG Group’s interest in the reserves and resources of certain tenements in the Walloons Fairway of the Surat Basin in Queensland.
Additionally, CNOOC will become a 10% equity investor in one of the two liquefaction trains which will form the first phase of the QCLNG development at Gladstone in Queensland, and BG Group and CNOOC will jointly participate in a consortium formed to construct two LNG ships in China that would be owned by the consortium.
The far-reaching agreement was signed in Beijing on Tuesday by the CNOOC president Fu Chengyu and the BG Group chief executive Frank Chapman. The transactions will be conditional on applicable government and regulatory approvals.
BG Group and CNOOC have been in partnership in offshore exploration in China since 2006. In 2008, BG Group and CNOOC signed a Memorandum of Understanding under which the two companies agreed to explore opportunities for strategic cooperation.
In June 2007, BG Group signed a 25-year agreement to supply Chile’s first LNG import terminal, and in April 2008 BG Group was selected as the LNG aggregator for Singapore for a period of up to 20 years. Upon execution of the fully-termed transaction documents with CNOOC, BG Group’s LNG supply commitments with partners and customers in Chile, Singapore and China will account for up to 8.3 mtpa, firmly underpinning development of the two-train first phase of the QCLNG Project.
“This agreement is another important milestone in the development of the Queensland Curtis LNG Project. It builds on an already strong and productive relationship established with CNOOC,” explained Chapman. “We look forward to working with our CNOOC partners as we drive forward our plans to establish QCLNG in the vanguard of a new world-class LNG industry in Eastern Australia.”
Upstream exploration, appraisal and development activities are advancing and FEED work is underway on the QCLNG project. In February this year, BG Group entered into an agreement with the Queensland Government to acquire a 270 hectare site at North China Bay on Curtis Island near Gladstone. The first phase of the QCLNG project will manufacture around 7.4 million tonnes per annum of LNG from two trains, beginning in 2014.
