Conoco, Origin Approve Australia LNG Project Expansion
07/03/2012| 09:07pm US/Eastern
By Ross Kelly
SYDNEY--A joint venture involving ConocoPhillips (>> ConocoPhillips) and Origin Energy Ltd. (>> Origin Energy Limited) has approved the expansion of a US$20 billion gas-export project in Queensland state, the companies said in separate statements Wednesday.
Houston-based ConocoPhillips and Sydney-based Origin said the partners had agreed to expand the project to two liquefied-natural-gas, or LNG, production units. The U.S. company said the earlier US$20 billion estimated cost of building the two units remained.
Origin said that while the cost estimate hadn't changed significantly, it has decided to begin stating it in Australia dollars instead of U.S. dollars. That changes the estimated cost to 23 billion Australian dollars (US$23.6 billion).
Since announcing a final investment decision on the LNG first train in July 2011, there has been no significant change in the US$20 billion cost "other than as a result of movements in foreign exchange rates, which at the time converted to A$23 billion", Origin said in its statement.
The partners said that China Petrochemical Corp. or Sinopec, had also finalized an agreement to lift its stake in the project to 25% from 15%. Origin said it and Conoco wanted to further dilute their interests in the venture below 37.5% each, and have agreed to start a joint sales process. Origin said it would like to retain around a 30% stake.
Origin said its funding requirement for project construction is expected to be met with existing debt facilities and cash resources. Any further dilution of its stake in the project "will improve this funding position," it said.
The expansion will double the project's expected LNG output capacity to 9 million metric tons a year. First LNG is expected to be shipped to Chinese and Japanese customers in mid-2015.
-By Ross Kelly, Dow Jones Newswires; 61-2-8272-4692; Ross.Kelly@dowjones.com