Brisbane, April 11, 2008 AEST (ABN Newswire) - Australia's leading coal seam gas producer, Queensland Gas Company (ASX: QGC)(PNK: QGSCF), today completed the transaction to form a world-scale LNG alliance with global energy company, BG Group.
The completion in Brisbane today resulted in QGC receiving A$664 million from BG Group (formerly British Gas). QGC Chairman Robert Bryan said he was delighted that the transaction was completed today, ahead of schedule and in recognition of the importance of a key component of the alliance with BG Group.
QGC and BG Group are working on a joint commitment for the annual export of 3-4 million tonnes of liquefied natural gas (LNG) from an LNG plant proposed to be built near Gladstone on the Central Queensland coast.
QGC will supply the LNG plant with 190 petajoules of coal seam gas a year from the company's tenements in the Surat Basin. The project is scheduled to export its first shipment of LNG in 2013.
"The transfer of the funds today from BG Group marks BG's first investment in Australia and reinforces the seriousness and credibility of the alliance with QGC," Mr Bryan said.
"This is a tremendous step forward for QGC because it provides us with the means to continue QGC's rapid growth." The transaction which gives rise to QGC's alliance with BG Group has received relevant approvals from the Foreign Investment Review Board (FIRB) and the Queensland Government.
QGC will receive a further $207 million from BG Group for the sale of a further 10 per cent of QGC's interests in the Walloon coal seam gas acreage, upon the earlier of a positive Final Investment Decision (FID), or the certification of 7,000 petajoules of proved and probable (2P) reserves.
Independent certifiers Netherland Sewell & Associates have assessed that QGC currently has 1,317 petajoules of proved and probable (2P) reserves, and more than 7,255 petajoules in reserves and contingent resources.
As part of the understanding with BG Group, Mr Bryan welcomed Mr David Maxwell, BG Group's Managing Director Business Development, as an alternate director to the Board of QGC.
QGC Managing Director Richard Cottee, in India on a trade mission with Queensland Premier Anna Bligh and for meetings with BG Group executives in Mumbai, said BG Group's initial investment is equivalent to more than 20 per cent of QGC's market capitalisation. He said the transaction will transform QGC's focus.
"The fact we have been able to achieve this just nine weeks after we jointly announced our innovative alliance gives me great confidence in the end game," Mr Cottee said.
"We are in the enviable position of having no debt, almost A$800 million in cash in the bank, growing reserves of coal seam gas, a track record of success, and a professional partner in BG Group - a top 10 company on the London Stock Exchange."
Of the A$664 million provided by BG Group today:
- About A$415 million is in return for a 20 per cent share of QGC's existing interests in QGC's world-class Walloon coal seam gas acreage; and
- About A$249 million is in return for 81,278,451 new shares equivalent to 9.9 per cent of QGC's expanded capital at A$3.07 a share.
Mr Cottee commended the Queensland Government for environmentally-friendly policies which have supported producers of natural gas, including coal seam gas.
The key policy requires Queensland users of large amounts of electricity to source a minimum of 13 per cent of their electricity from gas-fired generation. The figure will increase to 18 per cent by 2020.
Mr Cottee said QGC is in an ideal position to capitalise on the world's growing demand for LNG as a significantly cleaner, greener energy source.
Queensland Premier Anna Bligh, who joined Mr Cottee and BG Group executives in Mumbai, India, today to mark completion of the transaction, applauded QGC and BG Group for their rapid progress.
"I am excited by the tremendous advantages which this massive project promises to deliver for Queensland and for the environment on a global scale," Ms Bligh said.
"There will be several thousand job opportunities and ongoing economic revival of drought-stricken communities throughout the Surat Basin.
"We now look forward to a massive development programme, some $8 billion in capital expenditure, a new cornerstone for growth in Gladstone where the LNG plant will be built, and the export of a greener energy source.
"The royalties from the project will help to underpin the dynamic growth being achieved throughout Queensland.
"Having met the Chief Executive of BG Group, Frank Chapman, and his counterpart at QGC, Richard Cottee, I understand how the project is coming to fruition so quickly."
For further information on QGC go to www.qgc.com.au
For further information on BG Group go to www.bg-group.com
For further information on the alliance go to www.asx.com.au to see QGC releases on 4 February
Company Profile
Queensland Gas Company is a rapidly-evolving integrated energy business strategically positioned to meet rising demand for its abundant coal seam gas, cleaner power and ample water.
Since listing on the Australian Stock Exchange in 2000 QGC has become Australia's leading coal seam gas producer, Queensland's third largest company, and an award-winning business noted for nimble and innovative action.
QGC's world-class reserves in the Surat Basin are projected to supply around 20 per cent of the Queensland domestic gas market in 2009.
QGC's strengths are underpinned by Queensland Government policy, firm long-term contracts, Australia's move to cleaner, more efficient fuel sources, and the advent of a national carbon trading scheme.
The qualities and depth of QGC's assets and management have been recognised by Britain's BG Group (formerly British Gas), a global energy company seeking to partner with QGC to export gas to higher value overseas markets. In February 2008 QGC and BG Group announced a joint commitment of about $8 billion to enable the annual export of 3-4 million tonnes of liquefied natural gas (LNG) for 20 years. In April 2008 QGC received $664 million from BG Group as part of the transaction.
The LNG project involves targeting more than 7,000 petajoules (PJ) of 2P (proved and probable) gas reserves, construction of a 380 kilometre pipeline to the city of Gladstone, development of an LNG terminal, and several thousand new jobs.
Next year QGC will join the National Electricity Market. In February 2009 QGC will start supplying gas to QGC's new Condamine Power Station, which will produce 140 megawatts of electricity with minimal greenhouse emissions. QGC invests in applications for large volumes of water yielded during the release of coal seam gas. The water has the potential to help drought-affected communities, towns and farms in the Surat Basin.
Contact
Information for media:
Mr Hedley Thomas
General Manager
Communications and External Relations
Main: + 61 7 3020 9000
Direct: + 61 7 3020 9043
Mobile: +61 417 797 419
E-mail: hthomas@qgc.com.au
Information for investors:
Mr Ian Davies
Chief Financial Officer
Main: + 61 7 3020 9000
Direct: + 61 7 3020 9040
E-Mail: idavies@qgc.com.au
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