Origin Energy, ConocoPhillips Sanction Australia Pacific LNG Project

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Researched by Industrial Info Resources Australia (Perth, Australia)--ConocoPhillips (NYSE:COP) (Houston, Texas) and Origin Energy (ASX:ORG) (Sydney, Australia) have sanctioned the first phase of a four-train, 18 million-ton-per-year liquefied natural gas (LNG) project, known as the Australia Pacific LNG (APLNG) project.

The startup phase of development was sanctioned on July 28 for US$14 billion, inclusive of one liquefaction train with a capacity of 4.5 million metric tonnes per year, a 450-kilometre pipeline, and associated infrastructure necessary to support two trains. The second phase development of Train 2 is expected to be sanctioned within six months and will cost $20 billion, bringing production capacity to 9 million metric tonnes per year by early 2016.

The approval for expenditure was agreed upon by the APLNG joint venture partners following the finalisation of an estimated $95 million LNG purchase agreement with China Petroleum & Chemical Corporation (NYSE:SNP) (Sinopec) (Beijing). Sinopec will purchase 4.3 million metric tons of LNG per year for 20 years, with deliveries scheduled to begin in 2015. Sinopec has become an equity partner in the project with an unconditional subscription agreement under which Sinopec will hold a 15% interest in the APLNG project and the holdings of ConocoPhillips and Origin Energy will decrease from 50% to 42.5% each.

Sinopec has another Oceanic region LNG purchase agreement signed with Exxon Mobile Corporation (NYSE:XOM) (Irving, Texas), for 2 million metric tonnes per year of LNG for a period of 20 years beginning in 2014, from the Esso Highland-operated LNG project in Papua New Guinea.

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