Australia: Sinopec Raises Stake in APLNG
Australia Pacific LNG Pty Ltd and China Petrochemical Corporation (Sinopec) have today signed a Heads of Agreement (HOA) establishing non-binding key commercial terms for the sale and purchase of an additional 3.3 million tonnes per annum (mtpa) of LNG through to 2035, which upon completion finalises the marketing of the second train.
In conjunction with the LNG sale, the parties have also agreed non-binding key commercial terms for Sinopec to subscribe for additional shares in Australia Pacific LNG, which will raise its equity interest from 15 per cent to 25 per cent. As a result, ConocoPhillips’ and Origin Energy’s respective ownership interests will reduce to 37.5 per cent.
The HOA was signed today by Mr Jim Mulva, CEO of ConocoPhillips, together with Mr Kevin McCann AM, Chairman of Origin Energy, both also acting on behalf of Australia Pacific LNG, and Mr Fu Chengyu, Chairman of Sinopec.
Mr Mulva said, “Today’s signing completes marketing of the second LNG train and is an important milestone for the Australia Pacific LNG project. We are pleased to announce that Sinopec, a world-class energy company, will have an increased equity shareholding in Australia Pacific LNG.”
Mr McCann said, “The Heads of Agreement with Sinopec represents another significant step for Australia Pacific LNG project and is testament to the strength of the project, which is based on Australia’s largest 2P coal seam gas reserves. To that end, we are well placed to make a final investment decision on the second train in early 2012.”
Mr Fu said, “We are very pleased to extend our relationship with Australia Pacific LNG, and in doing so, will further assist China and Sinopec to meet its growing energy demands.”
Under the terms of today’s HOA with Sinopec, Australia Pacific LNG and Sinopec intend to incorporate the agreed-upon non-binding key commercial terms into binding agreements in the near future.
Those binding agreements will be subject to approval by the Chinese Government and, in Australia, the Foreign Investment Review Board, and will be conditional on Australia Pacific LNG reaching a final investment decision on the second LNG train.
In April 2011, Australia Pacific LNG and Sinopec signed a Sale and Purchase Agreement for 4.3 mtpa of LNG for 20 years from mid-2015 and an agreement in which Sinopec subscribed for a 15 per cent equity interest in Australia Pacific LNG. The first train of the project was sanctioned in July 2011, followed by the signing of a binding HOA with The Kansai Electric Power Company (Kansai Electric) in November 2011 for the sale and purchase of approximately 1 mtpa of LNG for 20 years from 2016.
Upon conversion of the HOA into binding agreements, Sinopec will be a purchaser of 7.6 mtpa of LNG in total from the project, with Kansai Electric a purchaser of 1 mtpa of LNG.
These agreements will build on Australia Pacific LNG’s existing domestic business, which currently provides more than 40 per cent of Queensland’s existing natural gas requirements. The project stands to create thousands of jobs in regional Queensland and deliver significant opportunities for many of the local communities in which it operates as well as broader economic benefits.
LNG World News Staff, December 12, 2011; Image: APLNG