Origin Energy Ltd. (>> Origin Energy Limited) has agreed to sell some of its vast coal seam gas reserves in Australia's Queensland state to a joint venture building a rival gas-export project on the coast.
The Australian company is building its own liquefied natural gas project with ConocoPhillips (COP) and China Petroleum and Chemical Corp. and has proven up more gas reserves than three rival ventures also planning to build LNG plants at the port of Gladstone.
Origin said it will sell some of its gas to Gladstone LNG, a joint venture between Australia's Santos Ltd. (>> Santos Limited), France's Total SA (TOT), Korea Gas Corp. (036460.SE) and Malaysia Petroliam Nasional Bhd.
Under the agreement, Origin will supply Gladstone LNG with 365 petajoules of gas over 10 years from 2015. Origin said the deal, for which a price hasn't been disclosed, gives Origin the option to call back 1.825 petajoules of gas a year during periods of high domestic gas or electricity demand.
The deal will cool analysts' concerns that Santos won't be able to prove up enough gas for its LNG joint venture.
Origin has already agreed to sell gas to BG Group PLC's (BG.LN) rival LNG project at Gladstone.
-By Ross Kelly, Dow Jones Newswires; 61-2-8272-4692; Ross.Kelly@dowjones.com