Origin Energy seals Sinopec deal and looks for more By Andrew Fraser

 THE Australia Pacific LNG project will step up negotiations with Thailand's major fuel importer after yesterday sealing with Chinese company Sinopec the biggest export deal for liquefied natural gas from Queensland.

 Earlier this week Australia Pacific, a joint venture between Origin Energy and ConocoPhillips, received approval from the federal government, after getting the nod from the Queensland government for its massive $35 billion project to convert coal seam methane gas to liquid natural gas at Gladstone, in central Queensland. 

 The government approvals have triggered more activity with customers, with Origin being able to access US giant Conoco's list of fuel buyers.

 Origin managing director Grant King said yesterday that Australia Pacific had been in discussions with Sinopec for "several months", and the company was involved in further discussions with other possible buyers in Asia.

 The talks were revealed by The Australian in December.

 "We've said for some time that we are in discussions with customers whose requirements can trigger the project," Mr King said.

 "Quite clearly, this announcement today evidences that.

 "This clearly increases confidence the project will proceed, so we would expect now to intensify the dialogue we have with potential customers for the project."

 While there are other possible customers for Australia Pacific in India and Japan, Thailand's PPT is the most advanced because it has deliberately set out to buy natural gas.

 PPT, a government-owned enterprise, is building a large terminal at Map Ta Phut Industrial Estate in Rayong, which is scheduled to begin receiving LNG supplies from later this year.

 Likewise, Sinopec earlier this year outlined plans to build a terminal in southern China capable of taking 3 million tonnes a year from 2014, but it already is able to import LNG.

 Despite yesterday's announcement of the Sinopec deal. Australia Pacific still has to make a final investment decision, placing it behind the Santos and British-owned gas projects.

 However, Mr King said that the company was now obligated to start delivering LNG to Singapore by 2015.

 "This clearly increases confidence that we're getting a lot of momentum behind us and that the project will proceed," he said.

 The company was likely to announce a final investment decision before the last quarter of this year. Mr King said yesterday: "There is still much to be done before we make that final investment decision".

 Yesterday's deal with Sinopec means the Chinese company will assume 15 per cent of the project and in return get 4.3 million tonnes of LNG annually for 20 years.

 This is the biggest deal for any of the Queensland LNG projects, trumping Queensland Gas's 20-year, 3.6 million tonne annual contract with China National Offshore Oil Corporation and its 20-year, 3 million tonne annual deal with Singapore.

 Origin and Conoco previously had 50 per cent each of the project but now have 42.5 per cent each, and Mr King indicated the company could sell down further. "For the right customer arrangements, we would be willing to put more equity on the table," he said.

©theaustralian.com.au