BG Group Alligns with Leading Australian Coal Seam Gas Company

BG Group plc announced an agreement to establish an alliance with Queensland Gas Company Limited (QGC), a leading coal seam gas exploration and production company supplying the Queensland market. Under the terms of the agreement, the two companies will co-operate in the exploration and development of onshore coal seam gas acreage as well as in the development of domestic market opportunities and a new LNG production and export facility on the Queensland coast.

BG Group will acquire: a 20% interest in QGC's coal seam gas assets in the Surat Basin, South West Queensland and in certain other related QGC assets; and a 9.9% stake in QGC, for a total consideration of UK299m.

The Group will also acquire a further 10% interest in QGC's coal seam gas and other assets on the earlier of: either the certification of proven and probable (2P) reserves of 7,000 petajoules (approximately 6.6 tcf); or the final investment decision approving the budget for the construction of a LNG facility to process and export jointly-marketed coal seam gas. BG Group will hold a 70% interest in the LNG facility and will offtake 100% of its initial planned production. The agreement is conditional upon necessary governmental and regulatory approvals.

The alliance will leverage the expertise of both companies. BG Group is a global energy company and QGC has extensive expertise in the exploration and production of coal seam gas -- an established hydrocarbon source in Australia and other countries.

The agreement marks BG Group's first investment in Australia. QGC and BG Group have also agreed to cooperate in the evaluation of further coal seam gas opportunities in India, where BG Group already has established upstream and downstream business interests.

BG Group Chief Executive Frank Chapman said: "Our focus is on connecting competitively-priced gas to high-value markets. This alliance with QGC will secure access to new and commercially-proven sources of gas, with significant reserves potential within reach of Australian and Asia-Pacific markets. We look forward to working with QGC to create value for both parties."