World first with Queensland LNG contract

Up to 8,500 Queensland jobs will be created and $60 billion in export activity from the state is set to begin after the signing of a landmark deal for the world’s biggest liquefied natural gas contract based on coal seam gas, Premier Anna Bligh announced today.

Ms Bligh said the BG Group and the China National Offshore Oil Corporation (CNOOC) today signed Australia’s largest liquefied natural gas contract between two single companies to supply 72 million tonnes of LNG from Queensland over the next 20 years – a deal which rivals the North West Shelf deposit off Western Australia.

The Premier said the gas would be supplied to China from 2014 from the Queensland Curtis LNG Project which is currently under development in Gladstone by the BG Group’s subsidiary, QGC Pty Limited, with up to $10 billion expected to be spent in construction over the next four years.

Ms Bligh said the project included:

·A significant coal seam gas development in the Surat Basin of southern Queensland

·A 540km pipeline network linking the gas fields near Chinchilla to the LNG plant at Gladstone in central Queensland

·An LNG plant on Curtis Island, near Gladstone, initially comprising two processing units, or “trains”, possibly to be followed by a third unit.

“This is an historic day for Queensland’s mining industry, for our state’s economy, for our regions and for our workforce,” Ms Bligh said.

“This agreement signals the beginning of a new era in the evolving LNG industry with thousands of jobs and billions of dollars in export revenue for Queensland.

“It is placing Queensland front and centre of this growing industry and means we are now a leading player in the global LNG market.

“At its peak during construction of the plant in Gladstone, gas fields in Chinchilla and Miles and construction of the pipeline, it will have a peak work force of 8,500.

“Once operational, this project will employ a further 1,000.

“The BG Group’s contract with the China National Offshore Oil Corporation is the country’s largest LNG contract between two single companies and will supply 72 million tonnes over 20 years from 2014.

“Our government has actively encouraged and supported this industry and in 2008, we declared the project significant and an environmental approval under Federal and Queensland legislation is expected by mid-2010.”

With the support of the Bligh Government, the multi-billion dollar gas fields will be centred in Surat Basin region with seven proposed projects in Gladstone alone and another in Bowen at various stages.

Four have been declared significant projects overseen by the Coordinator General and are at Environmental Impact Statement stage.

“It’s an indication of just how quickly this industry is growing in terms of the BG Group’s commitment to development in Queensland that just two years ago they had three employees in the state – today there are 700,” Ms Bligh said.

“This will place thousands more workers in this region and ultimately, this is jobs for Queenslanders, royalties for the Queensland economy and billions of dollars in infrastructure for this region and its future generations.”

The project is based on coal seam gas from QGC’s fields in the Surat Basin and today’s contract is the world’s first fully termed sales and purchase agreement for the supply of LNG from coal seam gas.

Australia’s largest previous LNG contract was for 82.5 million tonnes over 25 years between the North West Shelf Project, a consortium of six companies and CNOOC. This contract was signed in 2002.

BG Group and CNOOC have also agreed to jointly participate in a consortium to construct two LNG ships in China that will be owned by the consortium.

The agreement was signed today in Beijing by the CNOOC President, Fu Chengyu, and the BG Group Chief Executive, Frank Chapman.

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