Origin Energy Ltd agreed to sell a stake of 10% in the Australia Pacific LNG project for A$2.12 billion ($1.58 billion) to investor EIG Partners, in the world’s first deal involving private equity in an operating integrated LNG project.
The APLNG facility, which started up in Queensland state in 2016, is one of the largest producers of natural gas in eastern Australia, with long term LNG export contracts supplying China’s Sinopec and Japan’s Kansai Electric.
The deal marks EIG’s return to Australia, after the rebuff of its $11-billion bid for Santos Ltd in 2018 and the sale of its stake in Senex Energy in 2019.
“We’ve been around this east coast gas story for a while and are constantly on the lookout for opportunities. And that continues,” EIG Chief Executive Blair Thomas told Reuters.
EIG approached Origin two years ago in a strategy of chasing LNG investments on expectations of a key role for the fuel in the world’s transition to cleaner energy, Thomas said.
An Origin spokesperson confirmed that the companies have been in talks for two years, with no other bidders involved.
“When you look at APLNG, we think it’s best in class,” Thomas said in an interview.
“It’s got a fantastic operating history, it’s got a strong contractual framework. It supports both the domestic market and the export market. It’s got what we think are very attractive reserve bases.”
Power retailer and gas producer Origin will keep a 27.5% stake in the project, with the rest held by operator ConocoPhillips and China’s Sinopec.
“The material cash injection from this divestment provides further flexibility to deliver returns to shareholders and pay down debt,” said Origin Chief Executive Frank Calabria.
Origin will continue as operator of the coal seam gas fields that feed the plant, it said.
EIG has invested in other LNG projects, but those are tolling facilities rather than the more traditional integrated LNG projects, where gas production and the LNG plant that super-chills the gas for export are all owned by the same companies.
EIG has won approval of the deal from the Australian Foreign Investment Review Board. ConocoPhillips and Sinopec have rights to match its offer.
Source: Reuters.com