China giant tips $78m into coal seam gas minnow Exoma
* Michael Sainsbury, China correspondent
* From: The Australian
* December 09, 2010 12:00AM
CHINA is stepping up its bid for a large slice of Australia’s gas reserves.
Queensland exploration minnow Exoma will receive a $78 million investment by one of China’s three energy behemoths, China National Offshore Oil Corporation.
The deal is CNOOC’s first offshore investment in coal seam gas exploration and is part of a multi-trillion dollar project by China’s big three state-owned energy groups to secure supplies and resources to feed its urbanising and increasingly wealthy population.
If drilling over the next three years is successful, the result could be a $12 billion infrastructure project that links a new pipeline to an export gas terminal at Abbot Point, about 150km south of Townsville.
“We have been in talks with CNOOC for the past 13 months,” Exoma chairman Brian Barker said in Beijing yesterday.
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“This deal brings us not just expertise but access to markets.”
Exoma was keen to do this a “bit differently from other juniors” by securing a deal with a Chinese company at an early stage after rebuffing a number of big US energy companies, Mr Barker said.
If the project went to plan. China would provide “a lot” of the funding.
CNOOC, China’s biggest offshore energy company, will take a 50 per cent interest in a joint venture on all five of Exoma’s large central Queensland tenements, as well as an option to buy 19.9 per cent of Exoma — which is expected to be completed after government approvals — for a further $28m.
The assets are in Central Queensland’s Galilee basin around the town of Longreach, which is believed to hold the largest untapped coal seam gas and shale gas deposit in Australia.
Other companies, including AGL, Blue Energy and ConocoPhillips are also exploring in the region.
Mr Barker said there was a gas deposit of about 100 trillion cubic feet and that about 9-10tcf would be needed for a full commercial project.
“The only thing we have to do is to find out is we can get it out commercially,” he said. This would involved drilling 50-100 wells over the next few years.
The deal was triggered by China’s desire to deliver more of its energy through clean fuel and technology, and was the latest in a spate of deals by the country’s energy majors in the sector.
CNOOC has joined Petrochina — which has inked two deals in Queensland’s gas-rich coalfields — in tapping into the race for coal seam gas, and Sinopec has said it was planning its own deals in Australia.
It is CNOOC’s third Australian gas deal this year, after a wait of more than eight years since buying a 5.3 per cent interest in the North West Shelf.
In March the company agreed to spend as much as $60bn buying 3.6 million metric tons of LNG a year from BG’s proposed export terminal at Gladstone over 20 years, as well as a 5 per cent interest in its assets.
It has also entered a joint venture in Australia with Altona Energy to exploit the Arckaringa coal project in South Australia.
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