SYDNEY (AFP) — Australia's second largest oil and gas group Santos Ltd. said Thursday Malaysian energy giant Petronas Gas Bhd has agreed to take a 40 percent stake in its proposed liquefied natural gas (LNG) project by investing 2.5 billion US dollars.
Santos said Petronas would make an initial cash investment of 2.0 billion, plus a further payment of 500 million upon reaching a final investment decision for a second LNG train at the project site at Gladstone on the coast of the northeastern Australian state of Queensland.
Stage one of the project involves the construction of a three million tonnes a year single train plant, which will take gas from Santos' coal seam gas reserves in Queensland for processing into LNG.
Santos said a new joint venture company would be formed that would market the LNG, accessing Petronas' well-established customer base in Japan, South Korea and Taiwan.
The project is on track to enter the front end engineering and design (FEED) stage in late 2008. A final investment decision is expected by the end of 2009 or early 2010 with the first LNG expected in 2014.
Santos said Petronas was chosen as partner after a four-month selection process.
The proposed LNG plant is one of four proposed for the industrial port city of Gladstone, which is about 530 kilometres (330 miles) north of Brisbane.
Queensland Gas Co Ltd., 20 percent-owned by UK energy giant BG Group, is also planning to build a LNG plant at Gladstone.
BG Group has also made a takeover offer for Australia's Origin Energy Ltd., which holds extensive coal seam gas reserves in Queensland that could be used as a feedstock for the Queensland Gas project.
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