PetroChina Australia Buys Qld CSG Assets from Molopo

Liquefied Natural Gas Limited announced the execution of a Share Sale Agreement between Molopo Energy Limited and PetroChina International Investment Pty Ltd, pursuant to which PetroChina Australia will acquire 100% of Molopo’s coal seam gas assets in Queensland.

PetroChina Australia is wholly owned by PetroChina International Investment Company Limited, which in turn is a related company of LNG Ltd’s largest shareholder (19.9%) – China Haunqiu Contracting & Engineering Corporation (HQC). PetroChina Australia will support HQC for the gas supply arrangements of the LNG Project.

The significance of the announcement for LNG Ltd, is PetroChina Australia’s intention to deliver the Molopo gas, under a tolling arrangement, to LNG Ltd’s proposed 3 million tonne per annum LNG project at Fisherman’s Landing, in the Port of Gladstone, Queensland.

PetroChina Australia and LNG Ltd will commence negotiation of a Tolling Agreement pursuant to which PetroChina Australia will deliver the gas to LNG Ltd’s LNG Project for liquefaction, storage and loading onto LNG ships arranged by PetroChina Australia. Under the Tolling Agreement, LNG Ltd will receive a fixed Capacity Reservation Fee and also a Tolling Fee calculated on the quantity of LNG loaded onto LNG ships.

Molopo’s coal seam gas permit areas (owned ~67% by Molopo and 33% by Mitsui) are located only 150 km from Gladstone (refer to the attached map) and Molopo’s share of 3P reserves is 812 petajoules. Based on a number of independent assessments, the Molopo permit areas have the capacity to produce and deliver up to 65 terajoules/day of gas, representing ~50% of the minimum gas delivery volumes required to operate the LNG Project.

The proposed Tolling Agreement between PetroChina Australia and LNG Ltd is an important foundation step in LNG Ltd’s gas supply plan for the LNG Project. Discussions and negotiations are continuing on further tolling arrangements, together with potential gas purchase opportunities and direct acquisition of upstream gas resources.

LNG Ltd’s Managing Director, Maurice Brand, said “We welcome the announcement of PetroChina Australia’s acquisition of Molopo’s coal seam gas assets in Queensland. The proposed arrangement between PetroChina Australia and LNG Ltd will represent a significant milestone in the progression and implementation of LNG Ltd’s gas supply plan to secure sufficient gas to enable its LNG Project to proceed to final investment decision and construction”.

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LNG World News Staff, August 01, 2012; Image: LNG Limited