Following on from last month’s news of the LNG Gladstone project in Australia, the country has announced further investment in LNG. The news came when the Sydney based company, Eastern Star Gas, announced plans to raise A$100m (U.S. $92m) through selling shares to fund a LNG project in the New South Wales state of Australia.
The Sydney-based company announced plans yesterday at the Australian stock exchange. During the statement, Eastern Star elucidated its intentions to invest some A$48m of the funds in gas export, gas fields and drilling research.
However, an approximated A$59m of the funds raised will enable the construction of a small-scale LNG processing plant in New South Wales. The project is a joint undertaking by Eastern Star Gas and its partners, Hitachi and Toyo Engineering. Their collaborative plans hope to cater for a sudden hike in regional energy demand and, in particular, the small-scale gas needs of South-east Asia. Managing Director of ESG, David Casey, commented, “This announcement represents another important step toward full-scale development of the Narrabi CSG Project.”
He continued, “A key advantage of the Kooragang Island site is that it is large enough to accommodate the envisaged initial 1 million tonnes per annum (Mtpa) NLNG project, as well as potential expansion to at least 4 Mtpa.” ESG anticipate that the plant will be on-stream from 2014.
The announcement follows-on from a Memorandum of Understanding issued across the partner companies back in May. The initial MoU, released on 24th May 2010, committed the collaboration to investigating the potential for LNG in the Newcastle region. Casey continued, “We identified this site some time ago as an ideal location for our NLNG development plans, and were delighted when an opportunity to acquire it became available. We will pay a non-refundable 10% deposit upfront with the remainder payable in February 2011. If ESG does not receive the necessary approvals for the purchase to proceed under the acquisition agreement, the Company has the option to terminate the agreement until 14th January 2011.”
Although a fifth of ESG is owned by Santos, ESG has declined to confirm whether Santos intends to participate in the new project. Instead, Casey spoke of certainty; “The certainty that flows from having access to a dedicated parcel of land allows ESG to proceed confidently with project planning, approvals and commercial activities for the proposed NLNG project with greater confidence.”
The equity offer opened this morning at 10am Sydney time and closed at 5pm Sydney Time for Australia, or 7pm Sydney Time for Asia Pacific, UK and Europe. As of 30th June 2010, ESG had a cash position of A$31.6m. Following the placement, ESG will benefit from a pro forma cash position of approximately A$127.6m.