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.

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

Recommended

Persimmon yields 12.3%, but can you trust the company to deliver?
Share tips

Persimmon yields 12.3%, but can you trust the company to deliver?

With a dividend yield of 12.3%, Persimmon looks like a highly attractive prospect for income investors. But that sort of yield can also indicate compa…
1 Jul 2022
Don’t try to time the bottom – start buying good companies now
Investment strategy

Don’t try to time the bottom – start buying good companies now

Markets are having a rough time, so you may be tempted to wait to try to call the bottom and pick up some bargains. But that would be a mistake, says …
1 Jul 2022
Share tips of the week – 1 July
Share tips

Share tips of the week – 1 July

MoneyWeek’s comprehensive guide to the best of this week’s share tips from the rest of the UK's financial pages.
1 Jul 2022
Bunzl: boring is good for business
Share tips

Bunzl: boring is good for business

Food-service distribution company Bunzl is not a terribly exciting business, but it looks cheap and could be a great investment, says Rupert Hargreave…
30 Jun 2022

Most Popular

UK house prices are definitely cooling off – but are they heading for a fall?
House prices

UK house prices are definitely cooling off – but are they heading for a fall?

UK house prices hit a fresh high in June, but as interest rates start to rise, the market is cooling John Stepek assesses just how much of an effect h…
30 Jun 2022
How to invest in copper, the most important metal in the world
Industrial metals

How to invest in copper, the most important metal in the world

As the world looks to electrify and try to move away from fossil fuels, copper looks set to be the biggest beneficiary. But how can you invest? Rupert…
30 Jun 2022
Don’t try to time the bottom – start buying good companies now
Investment strategy

Don’t try to time the bottom – start buying good companies now

Markets are having a rough time, so you may be tempted to wait to try to call the bottom and pick up some bargains. But that would be a mistake, says …
1 Jul 2022