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ConocoPhillips sanctions second train at APLNG

LNG Industry,

ConocoPhillips has sanctioned the development of a second 4.5 million tpy production train for its Australia Pacific LNG CSG to LNG project in Queensland, Australia.

The sanctioning of the second train follows news that Australia Pacific LNG have signed a binding 20 year LNG sales agreement with Kansai Electric for 1 million tpy of LNG.

“This announcement marks another important milestone for the Australia Pacific LNG project and ConocoPhillips,” said Ryan Lance, chairman and chief executive officer. “Sanctioning of the second train is the final step in the approval process for the project. From this point we are committed to the development and construction of all infrastructure and facilities to ensure the first delivery of LNG in 2015.”

LNG exports from the second train are scheduled to commence in early 2016 under binding sales agreements to Sinopec Corp. and Kansai Electric Power Company (Kansai Electric).

Sanction of the second LNG train includes the further development of related upstream gas gathering and processing infrastructure as well as the construction of the second production train by Bechtel.

The estimated gross capital cost associated with the second train is US$ 6 billion, with a total two train project cost of US$ 20 billion. The majority of the scope will be executed under pre-agreed options to extend existing contracts related to the first LNG train, including the Bechtel International, Inc. and Bechtel Australia Proprietary Limited contract for facilities on Curtis Island.

Sales agreements

In April 2011, Australia Pacific LNG and Sinopec Corp. signed a sales agreement for 4.3 million tpy of LNG for 20 years from mid-2015 and a Subscription Agreement in which Sinopec Corp. subscribed for a 15% equity interest in Australia Pacific LNG. The first train of the project was sanctioned in July 2011, followed by the signing of a binding agreement with Kansai Electric in November 2011 for the sale and purchase of approximately 1 million tpy of LNG for 20 years from 2016. An amendment of the existing sales agreement with Sinopec Corp. was signed in January 2012 increasing their LNG purchase to 7.6 million tpy.

With sanction of the second train, the agreement for Sinopec Corp. to subscribe to an increased equity interest in the Australia Pacific LNG joint venture is now unconditional with completion due to occur shortly. Sinopec Corp.’s ownership interest will increase from 15% to 25%, with ConocoPhillips and Origin Energy’s ownership interest each being reduced from 42.5 percent to 37.5%.

Adapted form press release by Peter Farrell.

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