Golar, LNG Ltd Ink Preliminary Deal For Gladstone CSG Plant
20 February 2009 - 9:06PM
Dow Jones News
Golar LNG Ltd. (GLNG) said Friday it has signed a preliminary
deal to develop a $500 million plant at the port of Gladstone in
Queensland, Australia, to turn coalbed methane into liquefied
natural gas for export.
Golar said it would take a 40% stake in the plant, which has a
planned capacity of 1.5 million metric tons a year, and buy all the
LNG under the terms of a Heads of Agreement signed with Liquefied
Natural Gas Ltd. (LNG.AU), or LNG Ltd.
First production is scheduled for 2012, and talks were underway
to sell the LNG output to a customer, Bermuda-based Golar said,
adding that cargoes would use up to two of its existing LNG
carriers.
"The Gladstone project has the potential to materially enhance
the earning capacity and profile of the company," Golar Chief
Executive Gary Smith said in a statement.
A string of multibillion dollar deals over the past 18 months
have ignited interest in Australia's coal seam gas sector, with up
to five LNG processing plants earmarked for construction at
Gladstone.
Among the companies vying to build plants at Gladstone are BG
Group (BG.LN), Santos Ltd. (STO.AU), and Arrow Energy Ltd.
(AOE.AU). Origin Energy Ltd. (ORG.AU) and U.S. oil producer
ConocoPhillips (COP) also want to build an LNG plant at the
port.
Analysts say consolidation of plants may be inevitable to
enhance economies of scale, particularly given the tough
environment for raising funds.
In its statement, Golar said coal seam gas for its proposed
plant will be sourced from Arrow Energy's fields in central
Queensland.
Arrow has the option to take a 20% equity stake in the project,
with LNG Ltd. holding the remaining 40% interest.
"Golar anticipates that, in addition to financing to be raised
at the project level, it will also be able to raise financing in
connection with the offtake arrangements and thereby limit the
requirement for new equity that may be required by Golar LNG,"
Golar said.
Maurice Brand, managing director of LNG Ltd., said Golar had
been picked from a number of companies participating in the project
tender.
"The benefits of the Golar LNG proposal were compelling and the
company's directors considered that, in these challenging financial
times, the Golar LNG proposal package would deliver the best
outcome for the company and materially assist with first LNG
delivery in late 2012," Brand said in the statement.
-By David Winning, Dow Jones Newswires; 8610-65885848;
david.winning@dowjones.com
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