Australian Securities Exchange-listed AGL Energy Limited (AGL) has announced an agreement to sell its North Queensland gas assets to a consortium of Shandong Order Gas Co (Shandong) and Orient Energy.

The assets comprise AGL’s 50% interest in the Moranbah Gas Project Joint Venture (MGPJV), the North Queensland Energy Joint Venture (NQEJV), and AGL's participation rights in the ATP1103 exploration licence located in the Bowen Basin.

Arrow Energy Limited (Arrow) is the joint venture partner in the MGPJV, NQEJV and ATP1103 assets. AGL’s sale agreement with Shandong and Orient is subject to pre-emptive rights Arrow holds over the MGPJV and NQEJV assets. If Arrow does not exercise these pre-emptive rights, the sale to Shandong and Orient remains subject to receiving Australian and Chinese regulatory approvals and securing consents from joint venture counterparties. Arrow is a joint venture between Royal Dutch Shell and PetroChina.

Shandong is a Chinese gas distribution company that supplies gas to 7 million residents and 20,000 industrial customers. It owns and operates 3,000 kilometres of gas pipelines. The corporation’s total assets exceed US$5.5 billion, of which US$3 billion are energy assets. Orient is an Australian energy investment company with extensive experience in the exploration and production of gas in the Bowen Basin.

The MGPJV comprises gas fields near Moranbah and associated gas sales contracts. The NQEJV comprises transportation rights on the North Queensland gas pipeline, a power purchase agreement to toll gas through the Yabulu power station, and gas purchase and sale agreements.

AGL said in an ASX filing that the sale agreement is consistent with its February 2016 announcement that it intended to exit the exploration and production of natural gas. The company is also committed to exiting its coal-fired generation by 2050, and will instead focus on renewable energy.

Photo: arrowenergy.com.au