LNG falls despite $11.7bn gas deal

Shares in West Perth-based Liquefied Natural Gas Ltd have closed lower despite its link to an $11.7 billion gas deal in Queensland between its plant partner Golar LNG Energy and a member of the Toyota Group.

Norwegian shipping company Golar secured the multibillion deal, which was announced today.

Patersons oil and gas analyst Scott Simpson said at current values the deal was worth about $11.7 billion.

Under the heads of agreement 1.5 million tonnes per annum of liquefied natural gas would be sold to Toyota Tsusho Corporation from 2014.

The announcement follows a string of big LNG deals announced in recent weeks using gas from Western Australia's Gorgon gas project.

But the gas in the latest deal would be sourced from Arrow Energy's coalseam gas fields in central Queensland.

The gas would be sent to a proposed processing plant called Fisherman's Landing to be purified and liquefied.

The yet-to-be-built Fisherman's Landing plant, to cost an estimated $US500 million, will be owned in a joint venture between Golar and LNG Ltd known as Gladstone LNG. Both companies each hold a 40 per cent interest in the plant.

Arrow Energy has an option to take a 20 per cent equity in the plant.

Under the deal announced Friday, Golar would transport the processed gas from Australia to Toyota Tsusho's operations overseas.

A final investment decision on the Gladstone LNG project is expected before the end of this year.

"They (project partners) had a number of milestones to reach along the way and meeting these has been de-risking that project," Mr Simpson said.

"There were a number of sceptics out there originally, and this seems to be silencing them," he said.

Arrow Energy chief Nick Davies said the agreement was another confidence boost for the company's LNG plans.

"Our plans to deliver the world's first coal seam gas to LNG project are firmly on track for late 2012," Mr Davies said in a statement.

"Toyota Tsusho's involvement in the project ensures that world class operators are involved at every stage in the process from production through processing to consumption," he said.

Golar chief Oscar Spieler described the latest agreement as a milestone in the development of the Gladstone LNG project.

"We look forward to building a strong and mutually beneficial relationship with Toyota Tsusho over the life of the project," Mr Spieler said.

Shares in LNG Ltd closed down two cents at $1.81 on Friday.