Regional LNG: CNOOC acquires stake in North West Shelf LNG

China oil company CNOOC Limited on Thursday signed an equity sale and purchase agreement with the existing North West Shelf partners to acquire an interest in the upstream production and reserves of Australia's North West Shelf Project ('NWS Project').

The company will acquire a 25 percent stake in the China LNG Joint Venture, a new joint venture to be established within the NWS Project. Under the terms of the transaction, CNOOC will also acquire an approximate 5.3 percent interest in certain production licences, retention leases and an exploration permit of the NWS Project, and a right to participate in future exploration undertaken over and above the proven reserves. Should the final quantity of LNG committed under the LNG supply agreement to Guangdong be increased, the final percentage interest to be acquired by the Company will increase with a corresponding increase in the consideration payable.

CNOOC will pay US$348 million for the acquisition of its interest in the NWS Project, payable on completion once certain conditions, including the LNG supply agreement to Guangdong becoming unconditional, have been fulfilled. It is anticipated that completion will occur prior to the end of 2003.

"We are pleased to formalize our entry into this world-class gas project with world-class partners. This is the Company's first investment in Australia, and we believe it is a critical component of our natural gas strategy to supply the rapidly growing market in China," commented Wei Liucheng, Chairman and CEO of CNOOC Limited.

Merrill Lynch (Asia Pacific) Limited and Credit Suisse First Boston (Hong Kong) Limited were financial advisors to CNOOC in connection with the acquisition.

The NWS Project is a joint venture between the NWS Project partners and is Australia's largest resource project. The NWS Project partners comprise of BHP Billiton Petroleum (North West Shelf) Pty Ltd, BP Developments Australia Pty Ltd, ChevronTexaco Australia Pty Ltd, Japan Australia LNG (MIMI) Pty Ltd (Mitsubishi and Mitsui), Shell Development (Australia) Pty Ltd and Woodside Energy Ltd (Operator). The China LNG Joint Venture will be established to supply LNG from the NWS Project to the Guangdong LNG terminal commencing 2006, pursuant to the 25-year LNG supply agreement to Guangdong signed on 18 October 2002. (alex)