Liquefied Natural Gas Limited Reaches Deal with Petrochina for Queensland LNG Gas Supply

Liquefied Natural Gas Limited (ASX: LNG) has executed a non-binding Letter of Intent with PetroChina Australia regarding gas supply for its planned 3 million tonne per annum Fisherman’s Landing LNG Project in Gladstone, Queensland.

Under the agreement, both companies will work together to secure sufficient gas for the project’s first 1.5 million tonne per annum liquefaction train, which will assist in making a Final Investment Decision.

As part of this, PetroChina will consider acquiring prospective gas assets and permit interests as well as reach gas supply arrangements with gas owners in Queensland.

These will then be subject to potential Tolling Agreements with LNG Limited for the subject gas to be delivered to Fisherman’s Landing for liquefaction, storage and loading onto LNG ships arranged by PetroChina or PetroChina’s designated LNG buyer.

LNG Limited and PetroChina will now start negotiations on a Tolling Agreement, under which LNG Limited will receive a fixed Capacity Reservation Fee and Tolling Fee, covering the Bowen Basin coal seam gas assets that PetroChina is acquiring from Molopo Energy (ASX: MPO).

These assets are located just 150 kilometres from Gladstone and hold proved, probable and possible gas reserves of 812 petajoules net to Molopo.

Independent assessments indicate that these five permits have the capacity to produce up to 65 terajoules of gas per day, about 50% of the minimum gas delivery volumes required to operate the Fisherman’s Landing project.

The Fisherman’s Landing LNG project uses LNG Limited’s OSMR process to produce LNG. This is based on a proven simple single mixed refrigerant system with the addition of conventional combined heat and power and ammonia refrigeration technology to enhance plant performance.

LNG Limited believes this could halve plant cost while producing lower carbon emissions.

This, together with the its plant modularisation and construction strategy is expected to improve project economics

China Haunqiu Contracting & Engineering Corporation, LNG Limited’s largest shareholder (19.9%) and with ties to PetroChina, is currently preparing an engineering, procurement and construction proposal for the project.

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(Proactiveinvestors, Edited by Topco)