A major UK-based energy group has sold 25% of its stake in the Queensland Curtis LNG project to rationalise assets.
BG Group Plc has sold off a quarter of its massive Australian liquefied natural gas (LNG) project to China's largest offshore oil and gas producer, CNOOC for $1.93 billion. The sale will see the China National Offshore Oil Corporation's (CNOOC) interest in the first of two liquefaction units on Curtis Island, or “trains”, increase from 10% to 50%.
The Chinese major will also take a 25% stake in several Bowen and Surat Basin fields, which will supply coal seam gas to the plant. Committing yet further cash, CNOOC has earmarked between $3 billion and $4 billion for construction costs of the project.
On top of the asset sale, BG also announced a $60 billion, two-decade long gas sale agreement with the Chinese company. The deal will involve CNOOC purchasing five million tonnes of natural gas annually from BG over a 20 year period starting in 2015.
For BG Group, the sale comes as part of a larger project to rationalise its assets after a poor performance this year caused share prices to tumble. Despite forecasting 10% growth at the start of the year, a series of delays in North Sea projects and Brazil, trouble in Egypt and a scaling back of US shale production caused a considerable slump in production. Group Chief Executive Frank Chapman expects the sales to free up around $7.6 billion of much-needed capital by mid-2013.
The deal is still subject to approval from the relevant government and regulatory bodies.