BG Group Sells Interests in Queensland Curtis LNG Project To CNOOC For $1.93 Billion

Purchased additional interest in the Queensland Curtis LNG project.

BG Group has completed transactions with China National Offshore Oil Corp. (CNOOC) for the sale of additional interests in the Queensland Curtis LNG (QCLNG) project in Australia for US$1.93 billion, BG said in a news release.

Under a separate agreement, BG Group also will supply CNOOC with an additional 5 million tonnes per annum (MMtpa) of LNG.

CNOOC also has reimbursed BG Group for QCLNG project expenditure commensurate with its increased interests incurred from Jan. 1, 2012, to Sept. 30, 2013. From Oct. 1, 2013, CNOOC will fund project expenditure commensurate with its new equity holding, the release said.

Completion of the deal followed approvals from government, regulatory and other relevant authorities, and execution of related documents.

The key terms of the transactions are unchanged from those previously announced in the heads of agreement.

BG Group will sell certain interests in upstream coal seam gas tenements in Australia and a further equity stake in the QCLNG project Train 1 liquefaction facility and will supply CNOOC with a further 5 MMtpa of LNG for 20 years beginning in 2015, sourced from the Group's global portfolio, the release said.

CNOOC will acquire a 40% equity interest in QCLNG Train 1, increasing its equity ownership from 10% to 50%, and will acquire a 20% interest in the reserves and resources of certain BG Group tenements in the Walloons Fairway region of the Surat basin, Queensland, increasing its ownership from 5% to 25%. The company also will acquire a 25% equity interest in certain other upstream tenements held by BG Group in the Surat and Bowen basins, Queensland, according to the release.

BG Group and CNOOC will jointly invest in the construction of two LNG ships in China, adding to the two ships already committed under the LNG agreements signed in March 2010; and CNOOC will have the option to participate up to 25% in one of the potential expansion trains at QCLNG.

The agreements exclude any interest in the Train 2 liquefaction facility, transmission pipeline, and QCLNG project common facilities.

BG Group's Australian business, QGC Pty Limited, remains operator and retains majority ownership of the QCLNG project.

BG Group will have around 74% of its original interest in the upstream resource and related infrastructure; and 100% of the project’s common facilities on Curtis Island (including LNG storage tanks and jetty) and the 540-km (336-mile) natural gas pipeline network linking the gas fields to Curtis Island. Together, these items represent approximately 30% of the estimated 2011-2014 project spend.