APLNG, QCLNG reach gas supply deal

07 November 2018, Week 44, Issue 650

Australia Pacific LNG (APLNG) and Queensland Curtis LNG (QCLNG) have reached a long-term infrastructure sharing deal. This will allow QCLNG to transport gas and water from Arrow Energy’s Surat Basin fields using infrastructure it shares with APLNG.

APLNG will also be able to buy gas – up to 350 PJ (9.12 bcm) – from QCLNG at an oil-linked price over 10 years.

The infrastructure sharing will start in 2020 and run until 2035, with an option to extend to 2049. The APLNG gas purchase deal will begin in 2024. There are three LNG plants in the region, with Gladstone LNG (GLNG), giving total production of 25.3 million tpy.

The agreements are contingent on Arrow Energy reaching FIDs on various plans in the Surat Basin.

Working with QCLNG paves “the way for the development of significant new gas supplies in Queensland”, said APLNG’s CEO, Warwick King. “Australia Pacific LNG has taken the opportunity to grow and diversify our gas portfolio, while the tolling agreements with QCLNG allow us to maximise value from our investment in existing infrastructure.”

King added that the agreement would permit more gas to be developed in the most efficient way, keeping costs down. “Working together and using existing infrastructure will not only enable lower cost development of new gas supplies, it will also minimise impacts on landholders and local communities by avoiding duplication of infrastructure,” he said.

Arrow and QCLNG signed a 27-year gas sales agreement in 2017. This covered uncontracted volumes from the Surat Basin, with Royal Dutch Shell – a shareholder in both companies – saying such a deal was essential for this gas to be developed. Arrow was bought by Shell and PetroChina in 2010.

The deal between Arrow and QCLNG allowed the gas producer to drop previous plans for a proposed 470-km pipeline.

Given the high cost of Australian projects, the need to co-operate – in an attempt to extract savings and reduce duplicated infrastructure – is high. Working with rivals does not always go smoothly, though.

Edited by

Andrew Kemp

Editor

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