Petronas signed an agreement with Santos Limited of Australia to acquire a 40% interest in the latter's proposed integrated liquefied natural gas (LNG) project in Gladstone, Queensland for approximately US$2.5 billion. This comprises an initial payment of US$2 billion and a further payment of up to US$500 million upon a final investment decision approval for a second LNG train.
Under the terms of the agreement, a new 60:40 joint venture company will be formed to develop and operate a gas liquefaction facility at Gladstone with an initial one-train capacity of three million tonnes per annum. The new entity will also build and operate a 450km pipeline from jointly-owned upstream coal seam gas (CSG) assets to the project site, as well as undertake all marketing activities for the project's LNG output.
The partners will also cooperate in the exploration and production of selected upstream CSG assets in Queensland, with Santos as the operator.
The project has received Significant Project Status approval from the Queensland Government and is currently in the pre-front end engineering design (FEED) stage. The final investment decision is expected by the end of 2009, while the project's first LNG cargoes are planned for 2014.
The project will benefit from the expertise of both companies. Petronas is a leading player in the global LNG industry with more than 25 years of experience in the industry and successful LNG projects in Malaysia and Egypt. The joint venture would benefit from Petronas' technical expertise and has the opportunity to leverage on its capability in LNG shipping. Santos is a major Australian oil and gas exploration and production company with interests and operations in several countries in Asia. Santos is also Australia's largest producer and marketer of domestic natural gas and a leading CSG player in the region.
The acquisition marks Petronas' first investment in CSG assets and in an Australian LNG project. Petronas views the acquisition as a highly attractive opportunity, paving its entry into the Australian CSG gas industry and at the same time further strengthen its position as a global LNG player.
The acquisition is conditional upon necessary government and regulatory approvals.
The agreement for the acquisition was signed in Brisbane. Petronas was represented by its Vice President of Gas Business, Mr. Wan Zulkiflee Wan Ariffin while Santos was represented by its Acting CEO, Mr. David Knox.
