Chinese company buys 25% stake in Curtis LNG project

AN aerial view of the QCLNG site on Curtis Island.
AN aerial view of the QCLNG site on Curtis Island. Brenda Strong

BG Group has sold a quarter of its massive Queensland Curtis LNG project to China's CNOOC for $1.9 billion, while providing a downbeat assessment of its oil and gas production for 2013.

The sale will increase the interest of the China National Offshore Oil Corporation (CNOOC) in the first of two "trains" or liquefaction units to be built on Curtis Island from 10% to 50% - effectively a quarter of the LNG project.

CNOOC will also take a 25% stake in certain Bowen and Surat Basin fields, which will supply coal seam gas to the LNG plant.

BG also announced a new gas sale to CNOOC, five million tonnes a year, partly supplied by the Queensland Curtis LNG project, which is being managed by BG's Australian subsidiary QGC as operator and majority owner.

BG said the CNOOC deal would be conditional on government and regulatory approvals, which would include that of the Foreign Investment Review Board.

BG had flagged a selldown of its stake in QCLNG as part of a rationalisation of its global assets.

"Our agreement today to sell an interest in part of the QCLNG project to CNOOC means that we have now completed or reached asset sales agreements that should release a total of $US7.6 billion of capital by mid-2013," chief executive Frank Chapman said.

Earlier in the year, BG suffered a $US5bn cost blowout on QCLNG as it was hit by a higher Australian dollar and construction inflation.

Last night, chief executive Frank Chapman said the project was on schedule and budget.

"In Australia, we continue to make good progress with our Queensland Curtis LNG project, keeping it on track for first LNG in 2014," he said.

"We now have contracts and other agreements in place for more than 90% of the project scope to 2014, and we reconfirm the $US20.4b capital budget."

Announcement of the sale came as BG reported its September quarter earnings, which triggered a 14% drop in its share price - a record one-day fall for the stock - after Mr Chapman said production would be flat next year.

The deal comes amid concerns that the flow and size of Chinese investments in the resources sector are dropping.

According to a recent King Wood Mallesons study, only eight deals involving Chinese companies had been struck this year, half the level of two years ago.

Of recent Chinese bids for Australian mining companies, there has been a focus on companies with assets in Africa rather than Australia, which China is more and more seeing as a tougher place to do business.

Under the terms of agreement:

  •  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% working interest in certain upstream tenements held by BG Group in the Bowen Basin, 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 as a 25% partner in the first of any potential expansion trains at QCLNG.
  •  BG Group's Australian business QGC Pty Limited will remain operator and retain majority ownership of the QCLNG project.
  • BG Group will retain about 74% of its original interest in the upstream resource and related infrastructure;  100% of the project's common facilities on Curtis Island (LNG tanks, jetty); and the 540km natural gas pipeline network linking the gas fields to Curtis Island, which together represent about 30% of the estimated 2011-2014 project spend.

Topics:  bg group curtis island qclng qgc

'Brilliant': Exclusive 'women only' Gladstone groups change

STANDING UNITED: Boyne Tannum Men's Shed secretary William Taylor, pictured with fellow members Mike Robbins, Rick Bichsel and Bruce Williams, believes there's no reason for all-female and all-male groups.

A Gladstone man believes gender-based groups should for equality.

Mum 'consumed by fear' wants to help other mums

No Caption

MUM 'consumed by fear' of child birth figured out a way around it.

Young Gladstone woman attempts court escape

Noosa will gather to start a conversation on domestic violence.

Woman makes failed bid for freedom from a Gladstone court dock.

Local Partners

Jake left broken-hearted by Bachelorette break-up

Jake Ellis is one of the final three bachelors on The Bachelorette.

GEORGIA chooses Lee and Matty J as her final two suitors.

MOVIE REVIEW: Doctor Strange is out there in a good way

Benedict Cumberbatch in a scene from the movie Doctor Strange.

MARVEL'S new superhero takes viewers along on his mind trip.

MOVIE REVIEW: Jack Reacher sequel falls flat

Tom Cruise in a scene from the movie Jack Reacher: Never Go Back.

THE film's title Never Go Back should serve as a warning to fans.

The Bachelor contestants find love with each other

Former Bachelor contestants Megan Marx and Tiffany Scanlon have confirmed their relationship on social media.

MEGAN Marx and Tiffany Scanlon confirm relationship on Instagram.

Liam Payne wants to wed Cheryl Fernandez-Versini

Cheryl Fernandez-Versini and Liam Payne

Liam Payne reportedly wants to marry Cheryl Fernandez-Versini

Bindi Irwin 'honoured' to make MAXIM HOT 100 list

Wildlife Warrior named among Australia's most beautiful women

Bank reclaims Goondoon St complex plan, places on the market

Multi-million dollar development plan up for sale.

MULTI-MILLION dollar plan for Goondoon St complex on the market.

Tough times in CBD: Woolies says goodbye Ipswich

Woolworths in the Ipswich Mall.Photo: Rob Williams / The Queensland Times

The last day of trading will be January 1

Coles to pay new owner of Tannum servo $320K

UP FOR GRABS: Expressions of interest in Tannum's new service station, which will house the new Coles Express, closed this month.

INVESTORS bid for new Tannum service station under construction.

Look at me! Kath and Kim home up for sale

Kath and Kim from the iconic Aussie TV series.

'Crack open the Baileys and grab a box of BBQ Shapes'

How to fit 100,000 new homes on the Coast

Property, real estate, housing, suburb,  August 2016

Fitting 2m extra people in south-east Qld in 25 years a balance

Hinterland horse stud passed in for $8.25 million

UNREAL: This Maleny estate is incredible.

12-bedroom hinterland horse stud still available