EWC Enters Deal to Sell 30 Percent Interest in Abbot Point LNG (Australia)

EWC has entered into a non binding term sheet to sell a 30% interest in the Abbot Point LNG facility and associated pipelines with Orchid Fund Pte Limited, an affiliate of Richard Chandler Corporation and Energy World International Ltd, a company controlled by EWC’s Chairman, Mr. Stewart Elliott.

The Project is anticipated to consist of the development, ownership and operation in two phases of a gas pipeline of approximately 350 kilometres for the supply of gas from the Bowen Basin and the Surat Basin in Queensland to Abbot Point port and an LNG plant and export terminal at Abbott Point port. The LNG plant is expected to have an initial production capacity of 2 MTPA based on EWC’s modular liquefication units of 500,000 MTPA, however this may be increased in subsequent project phases. The second phase will be the construction of an additional gas pipeline of approximately 550km linking the Gilmore gas field and the Eromanga gas field to the pipeline to be constructed from Bowen Basin to the Abbot Point LNG facility.

The Project is currently in its early stages. The Company has recently completed a comprehensive pipeline survey for the construction of a pipeline from Abbot Point to Eromanga. EWC are also finalising the contract for the rights to acquire the land at Abbot Point port to build the LNG facility.

At this stage it is envisaged that the total capital expenditure required to complete the project will be in the order of US$1.5bn, of which both debt and equity funding will be required.

EWC will hold a 70% interest in the Project and will act as developer and project leader. Orchid Fund Pte Limited and Energy World International have each agreed to acquire a 15% interest in the Project valuing the Project at this stage at US$100 million.

The proceeds will be paid into a new company to be formed that will hold the Project. 50% of the commitment will be payable on closing of the transaction, with the other 50% payable on completion of the Initial Development and Final Investment Decision. The funds raised from this transaction will be used to partially fund the initial project investments including the feasibility study, land acquisition and costs associated with the formation of the new company to hold and develop the project.

Mr. Brian Allen, Executive Director of EWC commented that “The project requires substantial financial and technical commitments. Combining EWC’s strengths and competencies in modular LNG with the financial strength of the Richard Chandler Corporation and the direct commitment from Energy World International, we believe we have formed a group of shareholders who can develop the Abbot Point project. The transaction values the Project at US$100m, which represents a very substantial return on the time and money invested by EWC to date.”

Mr. Richard Chandler commented “The Richard Chandler Corporation believes in the importance of clean energy for sustainable development in Asia. The Abbot Point LNG project is a world class development that will make an important contribution to meeting Asia’s energy needs in the decades ahead.”

Mr. Stewart Elliott commented “This is an exciting project that meets the goals of EWC and EWI of bringing clean and affordable fuel sources to Asia and providing the infrastructure needed to achieve this. Over the past few years we have worked to put in place the foundations of several large scale projects. We are now embarking on a process of development and commercialization. We look forward to opening new markets for LNG by developing supply, production receiving terminals and distribution platforms for LNG.”

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LNG World News Staff, November 18, 2011; Image: EWC