CNOOC and BG Group Sign Agreements for New LNG Supply and Purchase of QCLNG Stake

CNOOC and BG Group Sign Agreements for New LNG Supply and Purchase of QCLNG Stake

On May 6, CNOOC announced that the company has signed LNG Agreements with BG Group for the purchase of certain interests in the Queensland Curtis LNG (QCLNG) project in Australia for $1.93 billion and the purchase of 5 million tonnes per annum (mtpa) of liquefied natural gas (LNG) for 20 years from BG Group’s global LNG portfolio. Upon completion, CNOOC will reimburse BG Group for its share of project expenditure incurred from 1 January 2012; and completion of this transaction is expected to occur by the end of the year.
Subject to government, regulatory and other relevant approvals and to the finalising and execution of certain other related documentation, today’s signing defines the terms for the purchase of the QCLNG equity interest and LNG volumes as originally laid out in the heads of agreement announced on 31 October 2012.
The detailed agreements were signed at a ceremony in Brisbane, Australia attended by CNOOC Chairman Wang Yilin and BG Group Chief Executive Chris Finlayson.
Under the LNG sale agreement, BG Group will supply CNOOC with 5 million tonnes per annum (mtpa) of LNG for 20 years beginning in 2015, sourced from BG Group’s global LNG portfolio. After signing the agreement, CNOOC’s mid- and long-term LNG contracted volumes will reach 21.6 mtpa.
Under the terms of the agreements signed today:
· CNOOC will acquire a 40% equity interest in QCLNG Train 1, increasing its equity ownership from 10% to 50%;
· CNOOC will acquire a 20% equity interest in the reserves and resources of certain BG Group tenements in the Walloons Fairway region of the Surat Basin, Queensland, increasing its equity ownership from 5% to 25%;
· CNOOC will acquire a 25% equity interest in certain other upstream tenements held by BG Group in the Surat and Bowen Basins, Queensland;
· 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.
Mr. Wang Yilin, chairman of CNOOC, said: “These new agreements with BG Group will not only substantially enhance the partnership in QCLNG and further the cooperation in the field of LNG between both parties, but also significantly facilitate the construction of CNOOC’s overseas production base of LNG. CNOOC will continuously strive to acquire competitive natural gas resources around the world, and to make positive contribution to developing China’s natural gas industry and securing clean energy supply to China.”
As the pioneering enterprise of China’s LNG industry, CNOOC imported 11 million tones of LNG in year 2012. Currently, CNOOC operates 4 LNG receiving terminals in Guangdong, Fujian, Zhejiang and Shanghai, and is constructing Zhuhai, Hainan, Shenzhen and other LNG receiving terminals, which will be commissioned in the following years.
Source: CNOOC
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