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CNOOC to buy LNG from BG

The agreement sets out that CNOOC will purchase 3.6 million tonnes per annum (MMt/a) of LNG for a period of 20 years from the start up of QCLNG as well as 5 per cent of BG’s interest in the reserves and resources of certain tenements in the Walloons fairway of the Surat Basin.

CNOOC will also become a 10 per cent equity investor in one of the two liquefaction trains; and, BG and CNOOC will jointly participate in a consortium formed to construct two LNG ships in China that would be owned by the consortium.

The two companies intend to complete negotiations and execute fully-termed transaction documents prior to BG”˜s final investment decision to sanction the QCLNG Project, which is expected in 2010.

Progress with the QCLNG continues to accelerate. Upstream exploration, appraisal and development activities are advancing and front-end engineering and design work is underway. The first phase of the QCLNG Project will manufacture around 7.4 MMt/a of LNG from two trains, beginning 2014. It also includes the development of a 380 km pipeline linking BG/QGC’s Surat Basin tenements to a Curtis Island port site.

The project has potential for expansion to 12 MMt/a subject to additional gas reserves.

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