West Perth-based Liquefied Natural Gas Ltd and its Brisbane-based partner Arrow Energy have restructured ownership of the Gladstone LNG project, giving Arrow full ownership of the planned LNG train.
West Perth-based Liquefied Natural Gas Ltd and its Brisbane-based partner Arrow Energy have restructured ownership of the Gladstone LNG project, giving Arrow full ownership of the planned LNG train.
LNG Ltd will retain majority ownership of associated project infrastructure, including the storage tank and jetty/ship loading facilities.
Gladstone LNG is one of several ambitious projects in central Queensland seeking to convert coal seam gas to liquefied natural gas, which would enable the fuel to be exported.
The competing projects are backed by major international groups, such as ConocoPhilips, Shell, Petronas and BG.
The Gladstone LNG project involves construction of a gas processing train with capacity of 1.5 million tonnes per year, substantially smaller than most other projects.
LNG Ltd Managing Director Maurice Brand said the company has made "exceptional progress" in achieving project milestones during 2009.
"The proposed restructuring principles are predicated on providing a better commercial framework to deliver the world's first coal seam gas to LNG export facility and greater certainty through the integrated development and ownership of the LNG process.".
"LNG Ltd has shared a strong relationship with Arrow since May 2007 and both companies are
committed to delivering the world's first coal seam gas to LNG shipment in 2012."
Arrow said in a statement the project was on track for FID in the March quarter of 2010 and to produce first LNG in late 2012.
LNG Ltd's statement is pasted below:
Gladstone LNG Project "Fisherman's Landing" Restructure Proposal
The Directors of Liquefied Natural Gas Limited (ASX: LNG, LNG LTD) are pleased to announce that a revised Heads of Agreement (HoA) has been executed with Arrow Energy Limited (ASX :AOE, Arrow).
The revised HoA establishes the "principles" of a material restructure of the Gladstone LNG Project, with the objectives of assisting both parties to achieve their targeted FID in the March quarter and provide increased certainty of the project's first liquefied natural gas (LNG) shipment from Gladstone in late 2012.
Under the revised proposal the Gladstone LNG Project will be split into an optimised structure of
"InfraCo" and "TrainCo", a structure which has been successfully used in other existing LNG projects, including Egypt LNG and Atlantic LNG. The key principles of the proposed restructure are:
- InfraCo will be established as an unincorporated joint venture between Gladstone LNG Pty Ltd
(51%), a wholly owned subsidiary of LNG Ltd, and Arrow (49%) to own, design and construct
the LNG project infrastructure including the storage tank, jetty/ship loading and all related
facilities and services (excluding the liquefaction train).
- TrainCo will be 100% Arrow owned and will develop a 1.5 million tonne per annum (mtpa) LNG
train on land under a sublease from InfraCo. The LNG train will include gas pre-treatment and
liquefaction facilities and utilise LNG Ltd's OSMR™ liquefaction technology under a technology
license and fee agreement. Arrow will source the gas for the LNG train from its fields in the
Surat Basin and, subject to final agreed terms, it is intended that Arrow will retain an option with
InfraCo to develop an additional LNG train.
- A Joint Venture Operating Company will manage the construction and operation of both InfraCo
and TrainCo.
Golar LNG Energy Limited (Golar), which has a Heads of Agreement with LNG Ltd for the sale and purchase of LNG from one LNG train, is participating in the restructure proposal and will have the potential to invest as part owner in InfraCo and TrainCo. Golar in turn has an LNG sales Heads of Agreement with Toyota Tsusho, part of the worldwide Toyota group of companies.
An overall Project Director will be appointed with responsibility for the development from the Surat
gasfields through to LNG loaded into a Golar LNG ship at Fisherman's Landing.
LNG Ltd Managing Director and Chief Executive Officer Maurice Brand said "LNG Ltd had made
exceptional progress in achieving project milestones during 2009 and had now lodged all necessary applications for development approvals required under the April 2009 EIS approval process".
"This mainly leaves the commercial structure for final resolution. During our discussions with Arrow to convert the 17 February 2009 HoA into a suite of commercial agreements, it became obvious that the most suitable and simple commercial structure for the Gladstone LNG Project involved Arrow owning the gas from initial production at the well head through to the point of the LNG buyers of Golar/Toyota Tsusho".
"The proposed restructuring principles is predicated on providing a better commercial framework to deliver the world's first coal seam gas to LNG export facility and greater certainty through the integrated development and ownership of the LNG process" he said.
"LNG Ltd has shared a strong relationship with Arrow since May 2007 and both companies are
committed to delivering the world's first coal seam gas to LNG shipment in 2012," Mr Brand said.
