Queensland Gas Company (QGC) rose by 15.2% today after it announced that it has signed an $872 deal with British energy firm BG Group to build a liquefied natural gas (LNG) plant on the Queensland coast.
QGC Chairman Robert Bryan and managing director Richard Cottee said both companies have committed to a long term alliance which will develop an LNG project producing 3 to 4 million tonnes per annum (tpa).
Under the agreement, BG Group will buy spend about $250 million to buy a 9.9% stake in QGC and a further $415 million in cash to buy a 20% share of its gas fields and exploration leases.
BG will also acquire a further 10% of the acreage for a total outlay of about $600 million once project targets have been met.
Mr Cottee said that the two companies are planning to invest $8 billion in the exploration and development of onshore coal seam gas acreage, as well as in the development of domestic market opportunities and a new "world scale" LNG production and export facility on the Queensland coast.
"This project puts Queensland's gas on the world stage and transforms QGC from an explorer and producer to a fully integrated energy company with outstanding growth potential," Mr Cottee said.
QCG maintains that the transaction is the most significant milestone in the company's history and will effectively position QGC as one of Australia's largest integrated energy companies.
"The agreement places QGC in the unique and enviable position of having export sales of its product to a market leader from the anticipated first shipment in 2013 until at least 2033," said QGC in a statement.
"The project is likely to provide tremendous value for our shareholders over the coming two decades and the creation of hundreds of jobs in Queensland."
QGC said global demand for LNG has been forecast to more than double to 400 million tonnes per annum in 2015 from 150 million tonnes per annum in 2006.
The market responded well to the news of the acquisition with shares in QGC closing up by 61 cents or 17.84% at $4.03.
