QCLNG pipeline pricetag revised

OREANDA-NEWS. Australian gas pipeline operator APA will pay between \$4.5bn-5bn to UK energy firm BG for the pipeline connecting the 8.5mn t/yr Queensland Curtis LNG (QCLNG) project to onshore coal-bed methane (CBM) fields, instead of the flat \$5bn announced last December.

The difference reflects a provision that the purchase price be adjusted according to the movements in the US producer price index between the date of the sale was agreed and its financial close. APA has recalculated a purchase price of \$4.5bn-5bn, but the final price will only be confirmed with the financial close, expected to occur before the end of the April-June quarter.

The lower purchase price for the 540km pipeline from the CBM fields in the Surat and Bowen basins to the port city of Gladstone will also be reflected in a change in tariff rates that APA will charge sole user BG, without affecting APA's return on investment, APA said.

The sale deal includes 20-year contracts to supply pipeline capacity to QCLNG, with options to extend by up to a further 20 years. But the QCLNG pipeline has excess capacity, which APA plans to use either to deliver additional gas or as storage to give its existing gas pipeline network on the east coast more flexibility. It will also consider expanding the pipeline if necessary.

BG shipped the first gas from QCLNG in December. Its second production train is scheduled to come on line in July-September. Since the pipeline deal was announced BG has become subject to a ?47bn (\$72.5bn) takeover by Shell.