BG Group BG. BG - HoA for sale of QCLNG stake & new LNG supply

  BG Group (BG.) - BG - HoA for sale of QCLNG stake & new LNG supply

RNS Number : 9380P
31 October 2012

News Release

31 October 2012

 BG Group signs Heads of Agreement for sale of QCLNG stake and new LNG supply

BG Group today announces that  it has signed a  Heads of Agreement (HOA)  with 
China National  Offshore  Oil Corporation  (CNOOC)  for the  sale  of  certain 
interests in the Queensland Curtis LNG (QCLNG) project in Australia for  $1.93 
billion and the sale of liquefied natural gas (LNG) from

BG Group's  global  LNG  portfolio. Fully-termed  transaction  agreements  are 
expected to be executed  in the first  half of 2013,  and upon closing,  CNOOC 
will reimburse BG Group  for its share of  QCLNG project capital  expenditures 
incurred from 1 January 2012. 

The interests conveyed include a stake  in certain upstream tenements and  the 
Train 1 liquefaction facility, as detailed below, but exclude any interest  in 
the Train  2 liquefaction  facility, transmission  pipeline and  QCLNG  common 

Under the LNG sale agreement, BG Group will supply CNOOC with 5 million tonnes
per annum (mtpa)  of LNG  for 20  years beginning  in 2015,  sourced from  the 
Group's global LNG portfolio. Combined with  the 3.6 mtpa LNG sale  agreement 
signed with CNOOC in March 2010*,

BG Group's total committed LNG  sales to China will be  8.6 mtpa - making  the 
company the largest  supplier of  LNG to  the world's  fastest growing  energy 

The significant transactions contemplated by the agreement will be conditional
on applicable government and regulatory approvals.

BG Group  Chief  Executive  Sir  Frank  Chapman  said:  "This  agreement  will 
substantially increase our partnership with  CNOOC in the QCLNG project.  The 
new LNG sales agreement will also enhance our close relationship with CNOOC by
providing material new supplies of natural  gas to China. We look forward  to 
building our partnership with CNOOC as we progress towards first LNG from  the 
QCLNG project in 2014."

Sir Frank added: "Equally significant is that this transaction, combined  with 
others recently announced, will  provide for an  aggregate capital release  of 
$7.6 billion by  mid-2013, exceeding  the portfolio  rationalisation plans  we 
announced in  February this  year. This  progress reflects  our commitment  to 
maintain a strong balance sheet and credit rating."

Under the terms of the HOA:

· CNOOC will acquire  a 40% equity interest  in QCLNG Train 1,  increasing 
its equity ownership from 10% to 50%;

· CNOOC will acquire a 20%  equity interest in the reserves and  resources 
of certain
BG Group  tenements  in  the  Walloons Fairway  region  of  the  Surat  Basin, 
Queensland, increasing its equity ownership from 5% to 25%;

· CNOOC will acquire a 25% working interest in certain upstream  tenements 
held by
BG Group in the Bowen Basin, Queensland;

· BG Group and CNOOC  will jointly invest in  the construction of two  LNG 
ships in  China, adding  to the  two  ships already  committed under  the  LNG 
agreements signed in
March 2010; and,

· CNOOC will have the option to participate as a 25% partner in the  first 
of any potential expansion trains at QCLNG.

BG Group's Australian business QGC Pty Limited will remain operator and retain
majority ownership of the QCLNG project. BG Group will retain:

· Around 74% of its original interest in the upstream resource and related
infrastructure; and

· 100% of  the project's common  facilities on Curtis  Island (LNG  tanks, 
jetty) and the

540 kilometre natural gas  pipeline network linking the  gas fields to  Curtis 
Island, which together represent approximately 30% of the estimated  2011-2014 
project spend.


Notes to Editors:


On 24 March  2010, BG Group  signed a LNG  sales contract with  CNOOC for  the 
supply of  3.6  million  tonnes  per  annum  (mtpa)  of  LNG  over  a  20-year 
period.Under the terms of  that sales contract, CNOOC  will be supplied  with 
LNG manufactured at  the QCLNG facility  on Curtis Island.  BG Group may  also 
supply CNOOC  from  the Group's  global  LNG  portfolio. Under  the  terms  of 
parallel agreements executed  at the  same time,  CNOOC acquired  a 5%  equity 
interest in the reserves  and resources of certain  BG Group tenements in  the 
Walloons Fairway  of  the Surat  Basin  in  Queensland; became  a  10%  equity 
investor in QCLNG Train 1; and, both BG Group and CNOOC agreed to  participate 
in a consortium to construct two LNG ships in China that will be owned by  the 

BG Group plc (LSE:  BG.L) is a  world leader in natural  gas, with a  strategy 
focused on connecting competitively  priced resources to specific,  high-value 
markets. Active in more than 20 countries  on five continents, BG Group has  a 
broad portfolio of exploration and production, liquefied natural gas (LNG) and
transmission  and  distribution  business   interests.  It  combines  a   deep 
understanding of  gas  markets with  a  proven  track record  in  finding  and 
commercialising reserves. For further information visit:

Picture Desks:

For  images  of  BG   Group  visit:   additional 


Mark Todd:    +44  (0)  118  929  3110

Kim  Blomley:  +44  (0)  118  938  6568

Out of Hours Media Mobile: +44 (0) 7917 185 707

Investor  Relations:    +44   (0)  118  929   3025


 There are matters set out within this announcement that are forward-looking
statements. Such statements are only predictions, and actual events or results
may differ materially. For a discussion of important factors which could cause
 actual results to differ from these forward-looking statements, refer to BG
  Group's Annual Report and Accounts for the year ended 31 December 2011. BG
    Group does not undertake any obligation to update publicly, or revise,
  forward-looking statements, whether as a result of new information, future
         events or otherwise, except to the extent legally required.

                     This information is provided by RNS
           The company news service from the London Stock Exchange


MSCZMMFGRMKGZZG -0- Oct/31/2012 08:33 GMT
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