AGL has announced its agreement to sell North Queensland gas assets to a consortium.
The consortium includes Chinese gas distribution company Shandong Order Gas, and Australian energy investment company Orient Energy.
The assets comprise AGL’s 50 per cent interest in each of the Moranbah Gas Project Joint Venture (MGPJV) and the North Queensland Energy Joint Venture (NQEJV), and AGL’s participation rights in the ATP1103 exploration licence located in the Bowen Basin.
The MGPJV comprises producing gas fields near Moranbah and associated gas sales contracts. The NQEJV comprises transportation rights on the North Queensland gas pipeline, a power purchase agreement to toll gas through the Yabulu power station and gas purchase and sale agreements.
Arrow Energy is the joint venture partner in the MGPJV, NQEJV and ATP1103 assets. AGL’s sale agreement with Shandong and Orient is subject to pre-emptive rights Arrow holds over the MGPJV and NQEJV assets.
If Arrow does not exercise these pre-emptive rights, the sale to Shandong and Orient remains subject to receiving Australian and Chinese regulatory approvals and securing consents from joint venture counterparties.
The sale agreement is consistent with AGL’s February 2016 announcement that it intended to exit the exploration and production of natural gas.
This announcement included the impairment of the carrying value of AGL’s gas exploration, evaluation and development assets and associated property, plant and equipment. AGL will provide further details of the financial outcome of the sale once it achieves financial close but does not expect any further impairments as a result of the sale of these assets.