BG Group has sold more interests in its Queensland Curtis LNG project to the China National Offshore Oil Corporation for $1.93 billion.

It also has signed an agreement to supply an additional five million tonnes of LNG per annum.

At a signing ceremony in Brisbane, BG Group chief executive Chris Finlayson said the agreements extended BG's strong relationship with CNOOC.

"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," Mr Finlayson said.

"Combined with the 3.6 million tonnes per annum LNG sale agreement signed with CNOOC in 2010, BG Group now has total committed volumes to China of 8.6 mtpa, which will make the group the largest supplier of LNG to the world's fastest growing energy market.

"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."

CNOOC group chairman Wang Yilin and various state and federal politicians attended the signing ceremony

"The future of LNG production is in Australia and today's agreement demonstrates we are increasing our capabilities in LNG construction and operation through a focus on innovation and the right approach from government and industry," Federal Resources and Energy Minister Gary Gray said.

Under the terms of the agreements:

  • BG Group 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 $1.93 billion.
  •  BG Group will supply CNOOC with a further 5 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%.
  • CNOOC will acquire 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% to 25%.
  •  CNOOC will 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.

The agreements exclude any interest in the Train 2 liquefaction facility, transmission pipeline and QCLNG project common facilities.

Completion of the transaction is expected by the end of the year, subject to government, regulatory and other approvals and to the finalising and execution of other related documentation.

BG Group's Australian business QGC Pty Limited remains operator and retains 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 (including LNG storage tanks and jetty), and the 540km natural gas pipeline network linking the gas fields to Curtis Island. 

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