CNOOC and U.K.'s BG Group to Buy LNG from Australia

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Researched by Industrial Info Resources (Sugar Land, Texas)-- CNOOC Limited (NYSE:CEO) (Beijing) has signed an agreement with the BG Group Plc (OTC:BRGYY) (Eastbourne, United Kingdom), a leading energy supplier in the U.K., to purchase liquefied natural gas (LNG) from the Queensland Curtis LNG project in Australia, CNOOC announced on May 13. According to the agreement, CNOOC will purchase 3.6 million metric tons per year of LNG for a period of 20 years after the project is commissioned.

Queensland Gas Company Limited (Brisbane, Australia), a subsidiary of the BG Group, is the developer of the project, which is expected to begin operation in 2014. Upon completion, the project will have two production lines capable of producing about 7.4 million metric tons of LNG per year.

CNOOC will become a 10% equity investor in the first production line of the project, located in Gladstone, Queensland. CNOOC will also buy 5% of BG's interest in the coal bed gas reserves in the Walloons Fairway of Surat Basin in Queensland. In addition, CNOOC and British Gas will establish a shipping company to build two LNG ships in China.

CNOOC will further continue to discuss the terms of cooperation with BG and is expected to have an agreement signed and brought into implementation before a final investment decision is made in the LNG project. BG expects a decision to be made by 2010.

As one of China's top three oil giants, CNOOC is a leader in the country's LNG sector with four LNG receiving terminals: Guangdong, Fujian, Zhejiang and Shanghai.

Before the agreement was signed, CNOOC signed contracts to buy LNG from Australia, Malaysia and Indonesia for its terminals on the coast.

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