AGL to sell NQ gas interests in plan to exit exploration

AGL Energy has agreed to offload its gas assets in North Queensland to a consortium including Chinese gas distributor Shandong.

The assets comprise of 50 per cent stakes in the Moranbah Gas Project joint venture and in the North Queensland Energy joint venture, and participation rights in an exploration licence in the Bowen Basin.

It does not include the Yabulu power station which is supplied by the joint venture.

The energy producer and retailer did not disclose financial details of the transaction but said the sale is not likely to result in any further impairments.

AGL has been looking to divest the assets after announcing in February last year that it would quit gas exploration and production activities, following a collapse in oil and gas prices.

At the time, AGL wrote down the value of its exploration and production assets by $ 640 million after walking away from the Gloucester coal seam gas project in northern NSW, pledging to stop production at NSW’s Camden gas project in 2023 and putting its Queensland gas assets on the block.

The Moranbah venture comprises producing gas fields and related gas sales contracts, while the North Queensland Energy venture includes transport rights on a gas pipeline, a power- purchase agreement to run gas through the Yabulu power station and gas sales agreements.

Under the deal announced on Friday, Shandong – which owns and operates 3000km of gas pipelines, along with local firm Orient Energy – will buy AGL’s interests in these assets.

The agreement will go through if AGL’s current partner in the joint ventures, Arrow Energy, does not exercise its pre- emptive rights to that stake.

Arrow Energy is itself jointly owned by energy giant Shell and PetroChina.

Shandong is a Chinese gas distribution company that supplies gas to seven million residents and 20,000 industrial customers.

The corporation’s total assets exceed US$ 5.5 billion ($ 7 billion) of which US$ 3 billion are energy assets.

Orient is an Australian energy investment company with extensive experience in the exploration and production of gas in the Bowen Basin.