China’s largest offshore oil and gas producer China National Offshore Oil Corporation (CNOOC) signed a liquefied natural gas (LNG) agreement with energy company BG Group on May 12.
The project development agreement (PDA) concerns the sale of LNG from BG’s Queensland Curtis LNG (QCLNG) project in Australia.
CNOOC will purchase 3.6 million tonnes per annum (mtpa) of LNG for a period of 20 years from the start-up of QCLNG, which is being developed by BG business QGC. It will also purchase a 5% interest in the reserves and resources of certain coal bed methane tenements being developed by QGC in Queensland.
State-owned CNOOC will become a 10% equity investor in one of the two liquefaction trains that will form the first phase of the QCLNG development at Gladstone in Queensland. And, together with BG, it will participate in a consortium to construct two LNG ships in China that will be owned by the consortium.
Negotiations and fully-termed transaction agreements are expected to be executed prior to BG’s final investment decision to sanction the QCLNG project. This is expected in 2010, with the first cargo of LNG scheduled for 2014.
Following up its work on the company’s spot / short term LNG agreements with the likes of Shell Eastern, Total G & P and Suez Global LNG, Herbert Smith advised CNOOC on the BG agreement with Asia energy group head Anna Howell (pictured) leading its team. BG instructed Howell’s counterpart at Fulbright & Jaworski, Stefan Ricketts.
Despite the tough economic conditions, the energy sector is still active. CNOOC is authorised to cooperate with foreign partners on oil and gas exploitation in China’s offshore areas. Energy company BG specialises in natural gas.