Rick Wilkinson
OGJ Correspondent

MELBOURNE, Sept. 8 -- Sydney-based Origin Energy Ltd. has shunned British suitor BG Group by selecting US major ConocoPhillips as operating partner in its four-train coal seam methane (CSG) and LNG project proposed for Gladstone in Queensland.

The move means that Origin has hooked up with a major LNG player with operational, marketing, and technological expertise but no interest in Origin's domestic gas and electricity business and hence an unlikely candidate for a takeover move against Origin.

The deal, announced Sept. 7, specifies that ConocoPhillips will pay as much as $9.6 billion (Aus.) for a 50% share in the CSG-LNG joint venture. This values Origin's 3P CSM reserves at $1.88/gigajoule.

Origin will act as the upstream coal seam gas supplier to the project while ConocoPhillips will be the downstream LNG operator. The 50:50 joint venture formed by the two companies will market the LNG, probably to Asian markets.