BG wins big Chinese gas deal  

The Australian reports that BG are taking the lead in selling LNG from coal seam gas - BG wins first big Chinese gas deal.

AUSTRALIA'S liquefied coal seam gas industry took a big leap forward yesterday when China National Offshore Oil Corp signed the first major supply deal with BG Group and agreed to take a stake in its $8 billion gas export plans.

The deal, which represents a defining moment in the development of the CSG industry, puts BG one step ahead of its rivals.

But at the same time it sharply increases the value perceptions of the reserves being proved up by other players in the fast-emerging sector and is likely to be followed by more supply deals with offshore buyers.

For an undisclosed price, the Chinese oil giant has agreed to buy 3.6 million tonnes a year of liquefied natural gas for 20 years, underpinning a whole processing unit, or train, of the two-train project.

CNOOC will also take a 5 per cent stake in gas ground in Queensland's Surat Basin and a 10 per cent stake in one of the two LNG trains.

The deal is a positive for the four parties trying to build multi-billion-dollar LNG plants at Gladstone to export Queensland's vast coal seam gas reserves.

It shows there are buyers for the yet-to-be proven CSG-to-LNG plants, despite suggestions from the likes of Woodside and Oil Search that there could be trouble selling the unconventional gas.

But it also puts the British gas giant at a marked advantage over its Gladstone CSG rivals in talks to consolidate the projects, a move most observers see as a must.

BG yesterday revealed that it would be prepared to take part in consolidating the four planned projects, joining sentiment expressed by rivals Origin/ConocoPhillips, Santos/Petronas and Shell.

"If and when there is some strategic benefit for Queensland Gas Co (BG's Australian unit) to contemplate consolidation, there may be some contemplation of it, but we are 100 per cent focused on developing our own world-class project," a BG spokesman said.

Shell, which has the least advanced of the projects and lacks CSG reserves, submitted an initial advice statement for its plans to the Queensland government yesterday.

It is believed Shell submitted advice for a four-train project, which would make its ambitions bigger than BG's and Santos's and equal to Origin's.