by Staff Writers
London (AFP) Oct 31, 2012
British energy producer BG Group said on Wednesday it will sell interests in its Queensland Curtis liquefied natural gas project in Australia to China's CNOOC for US$1.93 billion (1.48 billion euros).
"BG Group today announces that it has signed a Heads of Agreement (HOA) with China National Offshore Oil Corporation (CNOOC) for the sale of certain interests in the Queensland Curtis LNG (QCLNG) project in Australia for $1.93 billion."
The agreement also covered "the sale of liquefied natural gas (LNG) from BG Group's global LNG portfolio," it said in a statement.
The group will sell an additional 40-percent interest in the first production train of its QCLNG project, giving the Chinese state firm company a half-share in the facility.
Under the terms of the agreement, BG Group will also supply CNOOC with 5.0 million tonnes per annum of LNG for 20 years starting in 2015.
The company added that its total committed LNG sales to China, following the deal, will be 8.6 million tonnes per annum.
"This agreement will substantially increase our partnership with CNOOC in the QCLNG project," said BG chief executive Frank Chapman.
"The new LNG sales agreement will also enhance our close relationship with CNOOC by providing material new supplies of natural gas to China.
"We look forward to building our partnership with CNOOC as we progress towards first LNG from the QCLNG project in 2014."
However, despite the China deal, BG Group shares plunged in London stock market trading after the company also slashed its output growth forecasts in third-quarter results that were published one day earlier than scheduled.
Shares nosedived 13.09 percent to 1,155.50 pence in late morning deals on the FTSE 100 index, which was 0.06 percent higher at 5,853.26 points.
Sentiment was hit after the group lowered its production growth forecast for 2012 to just three percent.
BG added that output would not grow as expected next year, and blamed problems at oil and gas fields in Britain and Egypt, and low US natural gas prices.
Atif Latif, director of trading at Guardian Stockbrokers, told AFP that the share price slump was an "over reaction on the news that growth would be stagnant in 2013."
He added: "Disposals have been well received, such as the Queensland disposal (which) allows the balance sheet to strengthen (and) debt to decrease."
BG Group also announced that net profits jumped 22 percent to $1.29 billion in the third quarter, or three months to September, compared with the same period of last year. Revenues grew by 2.2 percent to $5.56 billion.
Total oil and gas production meanwhile increased by 4.6 percent to 646,000 barrels of oil equivalent per day. That missed market expectations for 664,000 barrels, according to analysts polled by Dow Jones Newswires.
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