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ConocoPhillips gives FID for Australia Pacific LNG project

LNG Industry,

ConocoPhillips today announced approval of the final investment decision for the initial train of a two train LNG 9 million tpa project by Australia Pacific LNG in Queensland, Australia.

Project sanction includes development of the necessary resources from Australia Pacific LNG's 24 trillion ft3 of coal seam gas (CSG) resources in the Surat and Bowen Basins to supply the first train requirements, installation of a transmission pipeline from the onshore gas fields to the LNG facility on Curtis Island and infrastructure commitments to support a second train.

LNG exports from the first train are scheduled to start in 2015 under a binding sales agreement for 4.3 million tpa with Sinopec Corp.

“This decision marks an important milestone for the Australia Pacific LNG project and ConocoPhillips,” said Jim Mulva, ConocoPhillips Chairman and Chief Executive Officer. “Australia Pacific LNG has one of the largest CSG reserve positions in Australia and with the project sanction ConocoPhillips builds on its position as the world's largest producer of CSG.”

“With the strengthening LNG market and Australia Pacific LNG's superior natural gas resource position, we expect to sanction the second train in time for early 2016 deliveries,” Mulva added.

Sanction of the project also satisfies the final condition precedent for Sinopec's subscription for a 15% interest in the Australia Pacific LNG joint venture. On completion of Sinopec's subscription, expected in early August, Australia Pacific LNG will become a joint venture among ConocoPhillips (42.5%), Origin Energy (42.5%) and Sinopec (15%).

The two train project is estimated to cost US$ 20 billion and, post start-up of the second train, the project has an anticipated peak production net to ConocoPhillips of 115-120 MBOED.

The decision also provides an immediate trigger for the development and construction of project facilities. The EPC contracts for the LNG facility have been awarded to Bechtel International, Inc. and Bechtel Australia Proprietary Limited, building on the successful collaboration between ConocoPhillips and Bechtel using ConocoPhillips' Optimised Cascade(R) LNG process. Early site works for the project have commenced and long lead items have been ordered to maintain the project schedule. Upstream work has also commenced and is being managed by Origin Energy Limited, leveraging its significant CSG experience in Australia.

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