04-07-2012

Australia Pacific LNG second train approved

The Australia Pacific LNG Board today announced it had approved the development of a second 4.5 million tonne per annum (mtpa) production train for its world-class coal seam gas (CSG) to liquefied natural gas (LNG) project on Curtis Island off Gladstone, in Queensland.

The second stage Final Investment Decision includes the further development of related upstream gas gathering and processing infrastructure as well as the formal approval for Bechtel to commence construction of the second production train.

Australia Pacific LNG Chief Executive Officer, Page Maxson said, "Today's announcement is an important milestone for the Australia Pacific LNG project, and is the final step in the approvals process for our 9.0 mtpa coal seam gas to liquefied natural gas project.

"Substantial progress has already been made on our project in the gas fields, along the pipeline and at the liquefaction facility; and with this final approval in place, we are on track to supply our customers with a cleaner-burning and reliable energy source," Mr Maxson said.

The cost of the full two-train CSG to LNG development is estimated to be A$23 billion, which is consistent with the US$20 billion cost estimate given at the announcement of the first stage Final Investment Decision in July 2011.

Construction on Curtis Island commenced in May 2011, with site works and development on schedule for the project's first LNG exports to begin mid-2015. Exports from the second LNG train are expected to commence in 2016.

The Australia Pacific LNG project currently employs 4,000 people, mostly in Queensland, and will create 6,000 construction jobs and 1,000 operational jobs for the ongoing operation of the project.

"We are focussed on ensuring Queensland benefits from this project through the creation of opportunities for suppliers and contractors, and to date we have spent more than $2.3 billion with local companies," Mr Maxson said.

Australia Pacific LNG's investments through its Social Impact Management Plan will provide significant contributions to the further development of regional capabilities in areas such as education, health and business development. These contributions will also help in developing social infrastructure such as affordable housing and airport upgrades.

In April 2011, Australia Pacific LNG and Sinopec Corp. signed a sales agreement for 4.3 mtpa of LNG for 20 years from mid-2015 and a Subscription Agreement in which Sinopec Corp. subscribed for a 15 per cent 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 1.0 mtpa of LNG for 20 years from 2016.

Australia Pacific LNG has a leading CSG reserves base in Australia and a current domestic production that provides more than 40 per cent of Queensland’s natural gas requirements.

With the taking of FID2, the agreement for Sinopec to subscribe to increase its equity interest in the Australia Pacific LNG joint venture from 15 per cent to 25 per cent is now unconditional with completion due to occur shortly.