BG Group sells Tangguh LNG interest

UK-based BG Group confirmed Tuesday it had signed a Sale and Purchase Agreement (SPA) for the sale of its 50 percent interest in the Muturi Production Sharing Contract (PSC) in Papua to Mitsui Indonesia Gas B.V for US$236 million cash.

BG said in a statement the transaction is expected to be completed by the first quarter of 2004. ?50 percent of the consideration is payable on completion, and 50 percent is payable on Project Sanction or in December 2004, whichever is earlier,? the statement said.

The Muturi PSC contains the Mogoi Deep gas discovery, which was drilled by BG in 1996 and which tested gas at a cumulative flow rate of 40 million cubic feet per day. BG's interest in the Muturi PSC provides it with a 10.73 percent interest in the Tangguh LNG project, which formed together with another two concessions, the Wiriagar and Berau PSCs. The reserves from the PSCs are sufficient to support three trains each of 3 to 3.5 million tons per annum of LNG for 25 years.

"With this sale, we have realised the full value of our stake in Tangguh for our shareholders. Tangguh is a good project for the remaining owners, but our scope for influencing the technical and commercial development - core strengths of BG - has always been limited. The proceeds of the sale will be used in the organic growth of our existing businesses and in exploring new opportunities which match our core skills," BG Executive Vice President and Managing Director, Eastern Hemisphere, Dave Robert commented.

Other than BG, the current participants in the Muturi PSC are CNOOC Muturi Limited with 44 percent, BP Muturi Holdings B.V. with 1 percent, and Indonesia Natural Gas Resources Muturi Inc (LNG Japan) with 5 percent. (Robert)