AGL Energy Limited is selling its North Queensland gas assets to a consortium comprising Chinese gas distribution company Shandong Order Gas Co and Australia energy investment company, Orient Energy.
The assets comprise AGL’s 50% interest in each of the Moranbah Gas Project Joint Venture and the North Queensland Energy Joint Venture and AGL’s participation rights in the ATP1103 exploration licence located in the Bowen Basin.
The Chinese investor backed Orient Energy is believed to also have acquired gas assets in the Roma region of Queensland from Santos last year.
The sale is subject to Arrow Energy, joint venture partner in the MGPJV, NQEJV and ATP1103 assets, not taking up pre-emptive rights which it holds over the MGPJV and NQEJV assets. Should Arrow not exercise these rights, the sale to Shandong and Orient remains subject to Australian and Chinese regulatory approvals and securing consents from joint venture counterparties.
AGL expects completion of the transaction to take several months.
AGL said the sale agreement was consistent with its February 2016 announcement that it intended to exit the exploration and production of natural gas. This announcement included the impairment of the carrying value of AGL’s gas exploration, evaluation and development assets and associated property, plant and equipment.
AGL said it will provide further details of the financial outcome of the sale once it achieves financial close but does not expect any further impairments as a result of this transaction.
The MGPJV comprises producing gas fields near Moranbah and associated gas sales contracts. The NQEJV comprises transportation rights on the North Queensland gas pipeline, a power purchase agreement to toll gas through the Yabulu power station and gas purchase and sale agreements.
Shandong supplies gas to seven million residents and 20,000 industrial customers.
It owns and operates 3,000 kilometres of gas pipelines. The corporation’s total assets exceed US$5.5 billion, of which US$3 billion are energy assets. Orient has extensive experience in the exploration and production of gas in the Bowen Basin.