BG Group inks A$60 billion LNG supply deal with CNOOC

UK's BG Group, which owns the CSG fields in Australia, has signed a 20-year liquefied natural gas (LNG) sales contract with state-owned China National Offshore Oil Corp (CNOOC) worth A$ 60 billion.

Although BG has not disclosed the financial terms of the deal, the Australian media has put a figure at around A$60 billion, making it the world's second biggest LNG supply deal after Chevron Corporation signed a $90 billion deal with Japan's largest utility Tokyo Electric Power Company in December 2009 to supply 4.1 million tonnes annually over a period of 20 years. (See: Chevron signs $90 billion gas deal with Tokyo Electric Power) 

The Reading, England-based BG said that it had signed the sales contract today to supply 3.6 million tonnes per annum (mtpa) of LNG over a 20-year period with CNOOC after concluding negotiations that began in May 2009.

Under the terms of the sales contract, BG will supply CNOOC with LNG manufactured at the Queensland Curtis LNG facility on Curtis Island, near Gladstone in Queensland, Australia as well as from the company's global LNG portfolio.

The Queensland facility is being developed by BG's wholly owned Australian subsidiary, QGC Pty Limited and will be supplied with coal seam gas from QGC's extensive acreage in the Surat Basin.

Subject to foreign investment and other regulatory approvals, CNOOC, China's third-largest oil company will acquire a 5-per cent equity interest in the reserves and resources of certain BG Group tenements in the Walloons Fairway of the Surat Basin in Queensland. The total book value of the assets being sold is approximately $ 270 million.