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BG Group and CNOOC sign heads of agreement

LNG Industry,

CNOOC and BG Group have signed a heads of agreement for the sale of equity in Queensland Curtis LNG and the sale of LNG supplies for US$ 1.93 billion.

Under the LNG supply agreement, BG will supply 5 million tpy of LNG to CNOOC for 20 years, commencing in 2015. This is in addition to the existing 3.6 million tpy LNG sale agreement which BG already signed with CNOOC in 2010. BG Group’s total committed LNG sales to China will be 8.6 million tpy, making the company the largest supplier of LNG to China. 

As part of the new equity agreement, CNOOC will acquire an additional 40% in QCLNG Train 1, bringing its stake up to 50%. The company will also acquire a 20% equity interest in the reserves and resources of certain BG Group tenements in the Surat Basin and a 25% working interest in certain BG Group upstream tenements in the Bowen Basin, Queensland.

The two companies will jointly invest in the construction of two LNG ships in China 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 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.”

Edited from press release by Peter Farrell.

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