Chinese oil and gas giant PetroChina has taken another step into the Australian coalseam gas sector, agreeing Wednesday to acquire Molopo Energy's assets in Queensland's Bowen Basin for A$43.4 million ($37.14 million).
PetroChina is already a 50% partner alongside Shell in Queensland-based Arrow Energy, which is planning to develop an 8 million mt/year LNG project on Curtis Island in the port city of Gladstone. A final investment decision on Arrow's project is expected in late 2013.
The deal with Molopo was welcomed by another local LNG hopeful, Liquefied Natural Gas Limited, which has tied up with a PetroChina-related company to pursue plans for a 3 million mt/year project at Fisherman's Landing in Gladstone.
Arrow Energy was originally signed up to supply coalseam gas to the Fisherman's Landing project, but LNG Limited was forced to start looking elsewhere in March 2010, when PetroChina and Shell acquired the producer to secure feedstock for their own development.
LNG Limited is 19.9% owned by China Huanqiu Contracting & Engineering Corporation, or HQC, a 100% subsidiary of PetroChina's state-owned parent China National Petroleum Corporation. Under LNG Limited's alliance with HQC, PetroChina Australia is providing support for the gas supply arrangements of the Fisherman's Landing LNG project.
In a separate statement, LNG Limited said PetroChina Australia intended to deliver the Molopo gas, under a tolling arrangement, to the Fisherman's Landing project. "Under the tolling agreement, LNG Limited will receive a fixed capacity reservation fee and also a tolling fee calculated on the quantity of LNG loaded onto LNG ships," LNG Limited said.
Molopo's coalseam gas permits, which it owns in a 67:33 joint venture with Japan's Mitsui, are only 150 km (93 miles) from Gladstone and have proven, probable and possible reserves of 812 Pj (774 Bcf), according to LNG Limited. Based on a number of independent assessments, the Molopo permits have the capacity to produce and deliver up to 65 Tj/day of gas, representing around 50% of the minimum gas delivery volumes required to operate the Fisherman's Landing project, the company added.
"The proposed tolling agreement between PetroChina Australia and LNG Limited is an important foundation step in LNG Limited's gas supply plan for the LNG project," the company said. "Discussions and negotiations are continuing on further tolling arrangements, together with potential gas purchase opportunities and direct acquisition of upstream gas resources."
Gladstone, on Australia's northeast coast, is an LNG boom town. Three coalseam gas-based LNG projects are currently under construction on Curtis Island, scheduled for startup over the 2014-2016 time frame.
UK-based gas giant BG Group's QGC subsidiary is building an 8.5 million mt/year facility on the island and a consortium led by Australia's Santos is working on a 7.8 million mt/year plant. The Australia Pacific LNG joint venture between ConocoPhillips, Origin Energy and Sinopec is also constructing a 9 million mt/year facility in the precinct.
