AUSTRALIA

Kansai takes first gas

JAPAN'S Kansai Electric is set to receive its first shipment of LNG coming from the Australia Pac...

The shipment left Curtis Island yesterday on the LNG Fukurokuju, which was recently built to fulfil Kansai's contract with ConocoPhillips, Origin Energy and Sinopec.

While Sinopec is signed up to take the lion's share of APLNG's capacity, 7.6MMtpa, all of the gas from APLNG Train 1 and most of Train 2, the Japanese utility has agreed to buy around one million tonnes of LNG each year for 20 years under a sales and purchase agreement signed in 2012.

"The departure of Kansai Electric's first cargo under the SPA represents another significant milestone in Australia Pacific LNG's history and highlights the strong partnership between our two companies," APLNG CEO Page Maxson said.

"It also demonstrates the important role our business plays in delivering a cleaner form of energy to the global market."

APLNG has now sent 27 shipments of CSG as LNG into the global market since APLNG began in January, and Train 2 is expected to start production before the end of the year.

Once up and running the two train plant will be the largest producer of natural gas in eastern Australia.

Off-take agreements for the $24.7 billion project have been signed for 8.6MMtpa of LNG, and in the immediate term the balance of the 9MMtpa development is expected to be sold into spot and short-term contracts.

China's ENN LNG Trading Company has signed a non-binding heads of agreement with Origin for a further 500,000tpa over 5-10 years, however that agreement is still to be finalised.

If successfully completed later this year Origin expects ENN will buy the gas from 2018 or 2019 and would free APLNG from selling gas into the over-supplied spot market until the mid-2020s.

APLNG produces natural gas from Australia's largest 2P CSG reserves base in Queensland's Surat and Bowen basins.

The gas is piped 530km to its LNG facility on Curtis Island where it is converted to LNG for export to customers in Asia.

APLNG was formed in October 2008 and is a joint venture between Origin (37.5%), ConocoPhillips (37.5%) and Sinopec (25%).

By 2018 Australia is forecast to overtake Qatar as the world's top producer of LNG.

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