Regional LNG: BG Group and CNOOC sign 20-year LNG deal

UK firm BG Group plc announced on Wednesday it had signed a Liquefied Natural Gas (LNG) sales contract with the China National Offshore Oil Corporation, (CNOOC), concluding negotiations announced in May 2009* for the supply of 3.6 million tonnes per annum (mtpa) of LNG over a 20-year period.

Under the terms of the sales contract, CNOOC will be supplied with LNG manufactured at the Queensland Curtis LNG (QCLNG) facility on Curtis Island, near Gladstone in Queensland, Australia. Additionally, BG Group may also supply CNOOC from the Group's global LNG portfolio.

The QCLNG facility is being developed by BG Group's wholly owned Australian subsidiary, QGC Pty Limited ("QGC") and will be supplied with coal seam gas from QGC's extensive acreage in the Surat Basin. BG Group expects to sanction QCLNG this year upon receipt of Queensland and Australian government environmental approvals, and the plant is planned to come onstream by 2014.

The deal is the world's first fully-termed sale and purchase agreement for the supply of LNG from coal seam gas, and marks the first sale of LNG from coal seam gas into China, the fastest-growing gas market in the world.

QCLNG is underpinned by BG Group global LNG supply agreements for up to 8.3 mtpa, consisting of the 20-year 3.6 mtpa agreement with CNOOC announced Wednesday, a 21-year 1.7 mtpa supply agreement to Chile and a 20-year agreement to supply up to 3 mtpa to Singapore.(alex)