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BG Group and CNOOC to sign agreement on QCLNG

BG Group and CNOOC have signed a Project Development Agreement related to the Queensland Curtis LNG (QCLNG) project in Australia. The project aims to produce coal seam gas to be transported by pipeline to Gladstone and to be liquefied on Curtis Island. The first phase of the QCLNG project will manufacture around 10 bcm/year of LNG from two trains, beginning in 2014. According to the agreement, CNOOC will purchase 5 bcm/year of LNG for a period of 20 years from the start-up of QCLNG. CNOOC will also acquire 5% of BG Group's interest in the reserves and resources of certain fields in the Walloons Fairway of the Surat Basin in Queensland; and it will become a 10% equity investor in one of the two liquefaction trains. In addition, BG Group and CNOOC will jointly participate in a consortium formed to construct two LNG ships in China that would be owned by the consortium. BG Group and CNOOC intend to complete negotiations and execute fully-termed transaction documents prior to BG Group's final investment decision on the QCLNG project, expected in 2010.

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