LONDON - BG Group PLC is looking to sell a stake in an Australian liquefied natural gas project, a deal that could net the fast-growing U.K. energy company as much as $2 billion, a person familiar with the matter said Friday.
The company will soon court potential investment in the Queensland Curtis LNG plant, a US$15 billion facility to cool natural gas extracted from coal bed seams and export it by ship to Asia.
The project, one of BG's flagship developments, is also among its most expensive. Selling 15% to 20% of its 93.75% interest would allow BG to defray some of the huge costs associated with building liquefaction units, or "trains," money that could then be reinvested in further exploration and production.
BG spokesman Neil Burrows said "we keep all assets in our global portfolio under review, but we don't comment on specific market rumors and speculation."
With a global portfolio that also includes lucrative crude and gas fields in Brazil, East Africa and the U.S., BG Group has become a top pick for many analysts impressed by both the firm's growing production base and its ability to transport and sell LNG to energy-hungry Asian consumers.
However, BG's relatively modest size has led to bouts of speculation that the company may choose to sell equity in some of its interests as a way of raising fresh capital for its ambitious plans.
Given that it controls an unusually large stake in the Queensland project--a decision made largely for the sake of expediency in progressing its initial development--raising money through a sale represents a prudent way to add to its funding options, the person said.
Although BG has said it will fund some $22 billion worth of capital expenditure over the next two years largely from cash flow, a Queensland Curtis stake sale will give it improved "flexibility" across its worldwide portfolio, the person added.
The keenest interest in a deal is likely to come from existing or potential LNG customers. China's national oil companies, state-back Middle Eastern investment groups and Japanese utilities are expected to be among those approached by BG.
Both China National Offshore Oil Corp. and Japan's Tokyo Gas Co. already hold small stakes in BG's planned LNG processing units.
BG first invested in Australia in 2008 through an alliance with the Queensland Gas Company Pty Ltd, which it then bought outright. QCG now serves as a wholly owned local subsidiary.
The Queensland project will eventually transport gas produced from inland fields some 540 kilometers to a planned LNG terminal on Curtis Island, near the city of Gladstone. Exports from two LNG trains with a combined capacity of 8.5 million tons a year are expected to commence from 2014.
Cnooc, which signed a 20-year supply deal with BG in 2010, will buy 3.6 million tons of LNG a year for the next two decades from the project.
Copyright (c) 2012 Dow Jones & Company, Inc.
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