LNG Ltd to Start Negotiations on Tolling Agreement

TEX reported that Australian LNG Limited, which has developed coal seam gas to liquefied natural gas project in Australia Fisherman's Landing LNG, will commence negotiations with PetroChina Australia in order to reach Tolling Agreement.

Australian Molopo Energy Limited announced on August 1st 2012 to have entered into an agreement with PetroChina Australia for the sale of its Queensland Bowel Basin coal seam gas asset to the company. It is estimated that daily 65 terajoules of coal seam gas will be produced at Molopo's gas field located 150 kilometers southwest of Gladstone Port.

PetroChina Australia intends to deliver the coal seam gas to FL LNG, in which its affiliate company China Haunqiu Contracting & Engineering Corporation has participated in.

LNG limited is planning to produce up to 3 million tonnes per year of LNG by two trains, with capacity of 1.5 million tonnes per year each, at Gladstone Port in collaboration with its largest shareholder China HQCEC. First of all, it aims to start LNG production at train 1, which is designed to produce 1.5 million tonnes per year. To reach such production volume, LNG Ltd has been proceeding with a project to procure 130 to 140 terajoules per day or 45 to 50 petajoules per year of feedstock gas.

LNG Limited has carried on negotiations, eyeing the possibility of signing tolling agreements with users of the LNG terminal that will enable it to earn a fixed capacity fee adequate to cover liquefaction cost, besides its purchase of natural gas from the third parties as well as its corporate acquisition. The company is now entering into full scale business negotiations with PetroChina Australia, a potential user of the LNG terminal.

However, the coal seam gas field that will be purchased by PetroChina Australia can produce maximum 65 terajoules of gas per day, that is about 50% of feedstock volume enough to fully operate a LNG train.

Meanwhile, LNG Limited is negotiating with other companies on the tolling agreement. It also has been tackling procurement of feedstock gas from Australian Metgasco and acquisition of Australian Westside Corporation.

As for some parts of Gladstone Port where FL LNG is scheduled to be constructed, in June LNG Limited won extension of commencement of the tenancy from Gladstone Port authority, which controls the site, until the end of December 2012. LNG Limited expects to make a final investment decision on the project within about six months from the beginning of the tenancy. If the project to procure feedstock gas smoothly, the FID is expected to reach around June 2013.