BG Group to sell Australian pipeline for $5bn

Oil and gas firm BG Group has agreed to sell its subsidiary QCLNG Pipeline to Australia’s natural gas services provider APA Group for about $5bn.

QCLNG Pipeline owns a 543km, large-diameter underground pipeline network connecting BG Group’s natural gas fields in southern Queensland to a two-train liquefied natural gas (LNG) export facility at Gladstone on Australia’s east coast.

The pipeline, which was built between 2011 and 2014, currently has a book value of $1.6bn.

The agreement is conditional on the commencement of commercial LNG deliveries from the QCLNG’s Gladstone export facility and on partner approval.

BG Group and its partners hold firm capacity rights in the pipeline for 20 years, with extension options.

The transaction, which is expected to be completed in the first half of 2015, is estimated to result in a post-tax profit of about $2.7bn.

BG Group interim executive chairman Andrew Gould said: "The sale of the QCLNG pipeline is in line with our strategy to focus on BG Group’s core areas of oil and gas exploration and production and LNG.

"The timing reflects QCLNG’s advanced stage of development; we are now on the verge of delivering the world’s first large-scale project using natural gas from coal seams as a feedstock for LNG."

APA Group owns and/or operates A$12bn of energy assets in Australia. The company’s gas transmission pipelines span every state and territory in Australia, delivering around half of the country’s gas usage.

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Image: QCLNG Pipeline owns a 543km, large-diameter underground pipeline network in Australia. Photo: Courtesy of BG Group.