Sinopec to buy LNG for 20 years from ConocoPhillips, Origin Energy

Sinopec, China's second-largest oil and natural gas producer, today signed a non-binding agreement with Australia Pacific LNG Pty for buying liquefied natural gas for 20 years and take a 15-per cent stake from a planned $35 billion Australian gas export project.

Under the heads of agreement signed today in Beijing, Sinopec will buy 4.3 million tonnes of LNG per year for 20 years starting 2015 from Australia Pacific's LNG development project in Queensland.

Australia Pacific is an equal joint venture between Texas-based ConocoPhillips and Sydney-based Origin Energy, Australasia's leading integrated energy company.

The agreement would reduce ConocoPhillips' and Origin Energy's stake to 42.5 each, with Sinopec holding 15 per cent.
 
The proposed deal with Sinopec comes three days after the $35-billion project received federal environmental approval.
 
Australia Pacific has Australia's largest coal seam gas reserves position located in the in the Surat and Bowen basins.
 
It is currently constructing a 450km-long gas transmission pipeline from the coal seam gas fields to an LNG plant at Gladstone and a LNG plant with a processing capacity of up to 18 million tonnes per annum.
 
''We look forward to welcoming Sinopec into the Australia Pacific LNG project as an equity partner and foundation buyer of LNG," said Jim Mulva, chairman and CEO of ConocoPhillips.
 
Mulva added, "With the underpinning of Sinopec, a world-class energy company, along with the recent approval of our EIS by the Australian authorities, we now expect to rapidly progress the project to sanction, with the first LNG cargo to be delivered in 2015.''
 

Kevin McCann, chairman of Origin Energy, said, ''This agreement with Sinopec is testament to the scale and quality of the Australia Pacific LNG project, which is based on world-class coal seam gas reserves and resources in Queensland.''  

Su Shulin, president of Sinopec indicated that he was pleased to have signed the Heads of Agreement with Mulva and McCann, thereby signalling intentions for long-term cooperation between Sinopec, ConocoPhillips and Origin Energy.

''This will help Sinopec diversify its natural gas supply and meet the rapidly increasing demand of customers in China,'' he said.