Monday, February 28, 2011

Sinopec tastes a slice in Origin's APLNG project.. More slices in APLNG up for grab!!!

Sinopec agreed to acquire a 15% equity stake in Australia Pacific LNG Pty Ltd (APLNG), a 50/50 joint venture created by Origin Energy and ConocoPhillips in 2008. Post transaction, the ownership structure in the joint venture would be- Origin Energy (42.5%), ConocoPhillips (42.5%) and Sinopec (15%). As part of this agreement, APLNG has agreed to supply up to 4.3 million tonnes per annum (MTPA) of LNG to Sinopec for 20 years. 
APLNG Overview
APLNG project includes the development of Australia Pacific LNG’s substantial coal seam gas resources in the Surat and Bowen basins over a 30-year period, a 450 km transmission pipeline, and a multi-train LNG facility on Curtis Island, near Gladstone. Initial plans for the LNG facility are focused on developing two LNG trains, each with a nameplate capacity of approximately 4.5 MTPA of LNG. The project is expected to be sanctioned by mid-year 2011, with the first LNG cargo to be delivered in 2015. The APLNG project’s reserves, as of June 30, 2010 were: Proved plus Probable - 10,143 PJ (1,594.13 MMBOE), Proved plus Probable plus Possible - 14,598 PJ (2,294.29 MMBOE) and Contingent Resources on best estimate case - 4,844 PJ (761.31 MMBOE).


What could be the value of 15% stake in APLNG
The value of the deal was not disclosed. However, the 15% stake in APLNG is estimated to be atleast around $2 billion. Here is a simple valuation method…
ConocoPhillips acquired 50% stake in APLNG for $8 billion when the financial crisis was wide spread in 2008. Of the total $8 billion, $2 billion was marked as performance payments. In comparison with the $6 billion price, the current deal involving 15% stake should be worth atleast around $2 billion.
Largest supply agreement amongst Queensland LNG ventures!!!
This supply agreement would be the largest for any of the Queensland ventures intending to liquefy gas extracted from coal deposits, Grant King, managing director of Origin Energy, told reporters.
Australia was China’s biggest supplier of LNG last year, accounting for 42% of the 9.4 million tons in imports, according to customs data. China paid an average $191 for each ton of Australian term-contract supplies in 2010, compared with an average $323 for all imports, including both term and spot cargoes, customs data show. “The deal will help Sinopec diversify gas supply sources to meet Chinese demand for natural gas," said Sinopec's General Manager Su Shulin in a statement.
More slices of APLNG up for grab!!
Origin and ConocoPhillips will “intensify the dialogue” with other potential customers and may sell more of its interest in the venture, Grant King of Origin Energy said. Will these Chinese, to quench their thirst for natural gas demand, again buy the additional stake?

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