Petronas in RM8b deal

PETROLIAM Nasional Bhd (Petronas) is strengthening its global liquefied natural gas (LNG) business through the acquisition of 40 per cent interest in Santos Ltd's LNG project in Gladstone, in the Australian state of Queensland, for US$2.5 billion (RM8.1 billion).In a statement yesterday, Petronas said it will make an initial investment of US$2 billion (RM6.5 billion) and a further payment of up to US$500 million (RM1.6 billion) upon a final investment decision approval for a second LNG train.The two companies signed the agreement for Petronas' proposed purchase in the state capital, Brisbane, yesterday.Under the agreement, a 60:40 joint-venture company will be formed to develop and operate a gas liquefaction facility in Gladstone, with an initial one-train capacity of three million tonnes a year.
"The new entity will also build and operate a 450km pipeline from jointly-owned upstream coal seam gas (CSG) assets to the project site as well as undertake all marketing activities for the project's LNG output," Petronas said.It added that the LNG project partners will cooperate in the exploration and production of selected upstream CSG assets in Queensland, with Santos as the operator."The project has received Significant Project Status approval from the Queensland government and is currently in the pre-front end engineering design stage," Petronas said.The final investment decision is expected by the end of next year, while the project's first LNG cargo is planned for 2014. Petronas also said that the LNG project will benefit from the expertise of both companies."Petronas is a leading player in the global LNG industry with more than 25 years of experience and successful LNG projects in Malaysia and Egypt."The joint venture will benefit from Petronas' technical expertise and will have the opportunity to leverage on its capability in LNG shipping," it said.Santos is a major Australian oil and gas exploration and production company with interests and operations in several countries in Asia. It is also Australia's largest producer and marketer of domestic natural gas and a leading CSG player in the region.The acquisition marks Petronas' first investment in CSG assets and in an Australian LNG project.The company views the acquisition as a highly attractive opportunity, paving its entry into the CSG industry in Australia while also strengthening its position as a global LNG player.The acquisition is conditional upon necessary government and regulatory approvals, Petronas said.At the signing, Petronas was represented by its vice president of gas business Wan Zulkiflee Wan Ariffin and Santos, by its acting chief executive officer David Knox. -www.btimes.com.my