BG Group PLC agreed to sell its wholly owned subsidiary Queensland Curtis LNG Pipeline Pty. Ltd. (QCLNG) to APA Group for about $5 billion. QCLNG owns a 543-km, large-diameter underground pipeline network linking BG’s natural gas fields in southern Queensland to a two-train LNG liquefaction and export plant at Gladstone on Australia’s east coast.
BG built the pipeline between 2011 and 2014. It has a current book value of $1.6 billion, according to BG. Tariffs payable on the pipeline will provide a fixed rate of return on the asset base with primary components escalating annually with US inflation indices. Expected tariff for calendar 2016 is $390 million, BG said.
The sale is conditional on the start of commercial LNG deliveries from the QCLNG plant at Gladstone (still slated for this year on the company’s web site) and on partner consent. BG Group and its partners have firm capacity rights in the pipeline for 20 years, with options to extend. BG earlier this year began commissioning the Surat basin coal-seam gas processing network that will feed QCLNG liquefaction (OGJ Online, June 27, 2014).
BG described this sale of “noncore infrastructure” as consistent with its strategy of actively managing its global assets.
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