Shares to Buy Liquefied Natural Gas (LNG)


Liquefied Natural Gas LNG ASXLiquefied Natural Gas (LNG), as the name suggests, is focused on liquefied natural gas (colloquially known as LNG) prospects locally and internationally.

The group is renowned for its Gladstone LNG Project at Fisherman’s Landing. The project boasts 18,000 PJ of uncontracted gas resources and is the lowest capital cost liquefied natural gas project in Gladstone (at around US$300/tonnes per annum).

The Gladstone LNG Project will remain the company’s major focus until achievement of targeted commercial operations in 2012.

As liquefied natural gas is in hot demand, Australian companies with exposure to the resource have drawn international interest.

LNG was one of the hot stocks in mid 2010, with its share price more than doubling in the month of July.

In a show of confidence, in late January China Huanqiu Contracting & Engineering Corp. agreed to acquire a 19.9% stake in the company.

Gladstone project

At present, the company is in the development progress on the planned three million tonne per annum (mtpa) LNG project at Fisherman’s Landing in the Port of Gladstone, Queensland.

The Gladstone Project will be the first coal seam gas (CSG) to LNG export project in the world and the first east coast of Australia LNG export project.

Located at Fisherman’s Landing, the Gladstone Project will benefit from local infrastructure, whilst the site area can potentially accommodate four trains at a guaranteed 6 million tonnes per annum (mtpa).

Stage 1 dredging and disposal approvals have been received, FEED is completed and a low-cost fixed price EPC proposal has been submitted.

The group has stated that LNG buyers are available, and it is focused on three partners.

China takeover

In late January, China Huanqiu Contracting & Engineering Corp. (HQCEC), an engineering unit of China National Petroleum Corp. (CNPC), agreed to acquire a 19.9% stake in LNG, the company.

CNPC is China’s largest producer and supplier of crude oil and natural gas.

The acquisition will make the CNPC unit the largest shareholder of the Australian firm. The parties would not disclose the value of the deal.

CNPC was eager to involve itself owing to the OSMR natural gas liquefaction technology offered by our Perth-based company.

The deal is a reflection of Chinese interest in Australian resource companies. CSG continues to be an in-demand part of the resource sector, and Australia in particular boasts a number of lucrative CSG regions.

December update

Though the company has yet to produce results, its December quarter report highlighted its focus on the deal with HQCEC, which constitutes a favourable turn for the group.

In the quarter the group continued to hold a 5% shareholding in Metgasco, and remains its largest shareholder.

The company also holds a 7.51 % shareholding in Oil Basins Limited (OBL). OBL has prospective oil and gas permit interests in the offshore Gippsland Basin of south-eastern Australia, the onshore Canning Basin of Western Australia and the offshore waters of the Carnarvon Basin.

The quarter also involved consideration by HQCEC and CNPC, or an affiliate of CNPC, as to their involvement in the Gladstone LNG Project, including direct investment in the project.

Outlook

As liquefied natural gas and coal seam gas continue to be a hot part of the resource sector, the company (LNG) stands to benefit from future production as well as international interest in its Gladstone LNG Project at Fisherman’s Landing, so it will be one of the stocks to watch in coming months.

China Huanqiu Contracting & Engineering Corp. agreed to acquire a 19.9% stake in the company last month. A major draw card was the Gladstone LNG Project, which is targeting commercial operation in 2012.

The company’s flagship project boasts 18,000 PJ of uncontracted gas resources and is the lowest capital cost liquefied natural gas project in Gladstone (at around US$300/tonnes per annum).

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