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BG Group makes fourth gas discovery in Tanzania

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by  BG Group
Press Release
Monday, March 26, 2012

BG Group announced Monday a fourth Tanzanian gas discovery from the Jodari-1 exploration well located in Block 1 offshore southern Tanzania. Preliminary evaluation of the well results indicates gross recoverable resources are in the range of 2.5 to 4.4 trillion cubic feet (tcf) of gas.

The partnership of BG Group (60 percent and operator) and Ophir Energy (40 percent) have had exploration successes in all four wells so far drilled in Tanzania, with mean total gross recoverable resources currently estimated to be approaching some 7 tcf of gas.

Jodari-1 is located approximately 24 miles (39 kilometers) offshore southern Tanzania and in a water depth of 3,770 feet (1,150 meters). It is part of the current three-to-four well exploration program, which also includes the acquisition of 965 square miles (2,500 square kilometers) of 3D seismic data in Block 1.

The next target for drilling is the Mzia-1 location in Block 1, some 14 miles (23 kilometers) to the north of Jodari-1. The discoveries announced previously are Chaza-1 in Block 1, and the Chewa-1 and Pweza-1 discoveries in Block 4.

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USA (Sabine Pass): BG Ups Sabine Pass LNG Volumes to 5.5 MTPA

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Cheniere Energy Partners, L.P. announced today that its subsidiary, Sabine Pass Liquefaction, LLC , has entered into an amended and restated LNG sale and purchase agreement with BG Gulf Coast LNG, LLC, a subsidiary of BG Group plc, under which BG has agreed to purchase an additional 2.0 million tonnes per annum (mtpa) of LNG, bringing BG’s total annual contract quantity to 5.5 mtpa of LNG.

BG will purchase 3.5 mtpa of LNG with the commencement of train one operations and will purchase a portion of the additional 2.0 mtpa of LNG as each of trains two, three and four commence operations.

Under the SPA, the purchase terms essentially remain the same, whereby BG will pay Sabine Liquefaction a fixed sales charge for the contracted quantity and will pay a contract sales price for LNG purchases based on the applicable Henry Hub index traded on the New York Mercantile Exchange, with the exception that the fixed sales charge will increase ratably in order to account for the increased fixed sales charge on the additional volumes.

In assessing the optimal contracting strategy for the Sabine Liquefaction Project, we have decided to sell part of the additional volumes on a long-term basis to BG, our first foundation customer,” said Charif Souki, Chairman and CEO.  “There’s a trade-off in whether we sell the additional volumes on a long-term basis or in the open market.  Contracting a portion of the additional volumes adds further certainty to the long-term cash flows of the project and preserves the opportunity for additional upside.

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USA: Cheniere, BG Ink LNG Sale and Purchase Deal

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Cheniere Energy Partners, L.P. announced today that its subsidiary, Sabine Pass Liquefaction, LLC, has entered into its first liquefied natural gas (LNG) sale and purchase agreement (SPA) with BG Gulf Coast LNG, LLC (BG), a subsidiary of BG Group plc, under which BG has agreed to purchase 3.5 million tonnes per annum (mtpa) of LNG.

Sabine Liquefaction is planning to develop the ability to produce 9 mtpa of LNG in the first phase of its project at the Sabine Pass Terminal owned by Cheniere Partners. On May 20, 2011, Sabine Liquefaction received authorization from the U.S. Department of Energy to export up to 16 mtpa of LNG destined to all countries with which trade is permissible.

Under the agreement, BG will pay Sabine Liquefaction a fixed sales charge for the full annual contract quantity and will also pay a contract sales price for LNG purchases based on the applicable Henry Hub index traded on the New York Mercantile Exchange. LNG will be loaded onto BG’s vessels. The SPA has a term of twenty years commencing upon the date of first commercial delivery, and an extension option of up to ten years. LNG exports are expected to commence as early as 2015. The SPA is subject to certain conditions precedent, including but not limited to Sabine Liquefaction’s receiving regulatory approvals, securing necessary financing arrangements and making a final investment decision to construct the liquefaction facilities.

BG is one of the largest participants in the global LNG markets and will be a strong foundation customer for our Sabine Pass liquefaction project,” said Charif Souki, Chairman and CEO. “Entering into this agreement is a significant milestone for our project and we look forward to finalizing additional commercial agreements and proceeding with the development of the first two trains.

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Australia: BG Still Targets Mid-2012 to Sanction Third QCLNG Train

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Queensland’s recent heavy rains and floods could delay the expansion of BG Group’s $18 billion Queensland Curtis LNG plant at Gladstone because the British gas giant has been unable to shore up gas reserves as quickly as it had hoped.

Speaking to investors in London on Tuesday night, chief executive Frank Chapman said BG was still targeting a mid-2012 sanction of a third LNG production train at Gladstone.

But to do so, BG needed to drill its coal-seam gas ground to increase the level of confidence it had in the 21 trillion cubic feet of what it called gross gas resources and turn them into reserves.

The name of the game at the moment is the maturation of that reserves and resources base within that period,” Mr Chapman said.

That has suffered some impact because of the flooding and the impact that’s had on access to drilling sites, but we’re still focused on moving some of that prospective resource into a more, higher confidence level to underpin a third train.”

Despite the rains, BG was still on track for first LNG exports from Gladstone in 2014, he said.

BG was the first of three big CSG-to-LNG proponents planning exports out of Gladstone from 2014.

Of the other two, the Santos-led Gladstone LNG project has begun construction, while the Origin Energy-ConocoPhillip joint venture is still waiting for board approval of its project.

Mr Chapman joined the chorus of voices touting stronger LNG demand because of the Japanese earthquake and subsequent Fukushima nuclear disaster.

He said the flow-on effect was likely to be long-term. “After (the) Three Mile Island (1979 nuclear accident) in the US, we saw lead times for nuclear projects going out to something like 12 or 13 years, and associated with that will be increased costs associated with more stringent regulatory safety requirements,” he said.

All of this, I think will result in medium to long-term higher gas demand for power, and as a consequence, extra demand for LNG, and this is going to cause a further tightening of a market situation which we already regarded as quite tight.”

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