China National Offshore Oil Corporation (Cnooc) has agreed to pay $1.93 billion for a supply contract as well as an additional stake in one of British energy producer BG Group’s liquefied natural gas projects in Australia.
The deal means Cnooc will raise its stake in a part of BG’s Queensland Curtis LNG project in Australia to 50% from 10%.
It also means BG Group’s total committed LNG sales to China will be 8.6 million tonnes per annum (mtpa) — making the company the biggest supplier of LNG to the world’s fastest-growing energy market.
Under the LNG sale agreement, BG Group will supply Cnooc with 5mtpa of LNG for 20 years beginning in 2015, sourced from the group’s global LNG portfolio. Combined with the 3.6mtpa LNG sale agreement signed with Cnooc in March 2010.
The interests conveyed include a stake in certain upstream tenements and a liquefaction facility, but exclude any interest in a second liquefaction facility, transmission pipeline and common facilities.
“This agreement will substantially increase our partnership with Cnooc in the QCLNG project,” said BG chief executive Frank Chapman.
“The new LNG sales agreement will also enhance our close relationship with Cnooc by providing material new supplies of natural gas to China,” he added. “We look forward to building our partnership with Cnooc as we progress towards first LNG from the QCLNG project in 2014,” Chapman added in a statement.
Analysts say the LNG facility needs investment — and China is both liquid and eager to secure energy supplies. For more on energy security, see the upcoming November cover story in FinanceaAsia.
The deal is still conditional on regulatory approval. Barclays represented BG Group.