Oil and gas explorer BG Group Plc (BRGYY.PK, BG.L) reported signing binding agreements with China National Offshore Oil Corp. or CNOOC for the sale of certain additional interests in the Queensland Curtis LNG or QCLNG project in Australia for $1.93 billion and for the supply of an additional 5 million tonnes per annum of liquefied natural gas or LNG. Further, CNOOC would reimburse BG Group for its share of QCLNG project expenditure incurred from January 1, 2012.
BG Group's Chief Executive stated: "These agreements extend our strong relationship with CNOOC, which spans not only LNG but also exploration offshore China and production in the UK Continental Shelf through participation in the large Buzzard oil field. As a foundation partner in QCLNG, CNOOC was among the first to recognise the value and strategic importance of this world-first project - a vision that is now coming to fruition as we move towards first LNG in 2014."
As part of the agreements, BG Group would sell certain stakes in upstream coal seam gas tenements in Australia and a further equity stake in the QCLNG project Train 1 liquefaction facility for $1.93 billion; and would supply CNOOC with a further 5 mtpa of LNG for 20 years beginning in 2015, sourced from the Group's global portfolio. CNOOC would buy a 40% equity interest in QCLNG Train 1, increasing its equity ownership from 10% to 50%; as would acquire a 20% stake 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%.
Also, CNOOC would purchase a 25% equity interest in certain other upstream tenements held by BG Group in the Surat and Bowen Basins, Queensland. Both BG Group and CNOOC would jointly invest in the construction of two LNG ships in China. CNOOC would have the option to participate up to 25% in one of the potential expansion trains at QCLNG. The transaction may close by the end of the year.
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