BG Group and China National Offshore Oil Corporation sign deal

BG Group has signed a deal with China National Offshore Oil Corporation (CNOOC) for the sale of certain additional interests in the Queensland Curtis LNG (QCLNG) project in Australia for 1.93bn dollars.

The FTSE 100 company will also supply an additional 5.0m tonnes per year of liquefied natural gas.

CNOOC will reimburse BG Group for its share of the project expenditure incurred from January 1st.

"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," BG Group Chief Executive, Chris Finlayson, said.

"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."

He said the agreement brings BG's total committed volumes to China of 8.6m tonnes per annum (mtpa), making it the largest supplier of LNG to the world's fastest growing energy market.

It follows an LNG sale agreement with CNOOC in 2010 for 3.6mtpa.

"More broadly, the agreements expand our strong LNG position in the Asia-Pacific region, where we are on schedule with our LNG export project on Curtis Island in Queensland; where we have signed long-term LNG sales contracts with customers in China, Japan and India; and, where we will soon begin importing LNG into Singapore through our position as sole gas market aggregator," Finlayson said.

Under the new agreement BG 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 for $1.93bn.

BG will also supply CNOOC with a further 5.0 mtpa of LNG for 20 years beginning in 2015, sourced from the group's global portfolio.

CNOOC will acquire a 40% equity interest in QCLNG Train 1, increasing its equity ownership from 10% to 50%.

It will buy 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 5.0% to 25%.

The company will also 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.

CNOOC will have the option to participate up to 25% in one of the potential expansion trains at QCLNG.

RD