PS:China approves HQCEC purchase of Liquefied Natural Gas Limited stake
The Chinese government has approved China Huanqiu Contracting & Engineering Corporation's acquisition of just under 20% of Australia's Liquefied Natural Gas Limited, paving the way for a resumption in development of the company's Fisherman's Landing LNG project in the Queensland port city of Gladstone.
The approval from China's Minister of Commerce was the final condition precedent to make the transaction unconditional and fully binding, LNGL said Tuesday. The placement price has been set at A$0.3783 (39.95 cents)/share, and the funds raised total A$20.144 million.
"This now completes the company's corporate requirements and means that the company and HQCEC can now focus on its immediate objective to secure gas supply and progress the Gladstone LNG project at Fisherman's Landing," said LNGL Managing Director Maurice Brand. "Importantly, HQCEC brings to the 3 million mt/year Gladstone LNG project both technical and financial credibility and a shared vision to deliver the Fisherman's Landing LNG project, resulting in enhanced shareholder value," he added.
HQCEC is wholly owned by state-controlled oil and gas giant China National Petroleum Corporation.
The Fisherman's Landing project has been on ice since March 2010, when LNGL's original coalseam gas supplier, Arrow Energy, agreed to a A$3.4 billion takeover by Shell and PetroChina, which is the business arm of CNPC. The two global oil giants acquired Arrow and its extensive coalseam gas acreage in the state of Queensland to provide feedstock for their own proposed 8 million mt/year LNG project on Curtis Island in Gladstone.
The Fisherman's Landing project was planned to be built in two stages, with the first 1.5 million mt/year LNG production train expected to cost $720 million. Prior to the loss of partner Arrow, LNGL was targeting a startup date for the plant in 2012.
LNGL and HQCEC are now planning to finalize gas supply arrangements and recommence construction of the project, expected to take 30 months. HQCEC is expected to present an engineering, procurement and construction contract proposal for the project by September 2011, as well as arrange offtake and funding agreements.
