British Gas turns up the heat on export plant
The company is hoping for first gas to flow through the plant as soon as late this year as it begins commissioning, along with starting power generation. Initial gas flows of about 20 million cubic feet are needed in the first two or three months.
"We are negotiating a number of third-party supply agreements, so that we are as well placed as we can possibly be to fill those trains [plants] to the brim as soon as they start up," managing director Chris Finlayson told analysts last week.
"The faster we can go and the faster we can fill them both, the more rapidly we get our cash flow. We'll see how we go in the next six to nine months."
Ramping up export quickly was "really the value creator ... rather than the absolute date of a start-up", he said.
Confirmation that the company is seeking additional gas reserves comes amid speculation in the sector that each of the three Queensland export gas projects may be short of gas to meet their contractual commitments.
Earlier this year, British Gas finalised the sale of a half-interest in the export gas project to China National Overseas Oil Co, which included a share of exploration acreage. British Gas is looking to free up cash from the project by selling part of its equity in the infrastructure.
Recently, Origin Energy flagged the potential sale of part of its equity in its own pipeline, although details are still sketchy.
Mr Finlayson told analysts British Gas is hoping to sell equity in its water treatment plant along with its gas supply pipeline on a sale and leaseback basis.
"We are doing lots of work looking at that [but] that was not going to be possible ... until there was an income stream to show with it, and as such it would have to be after they came on stream.
"It's a little premature to bring this to conclusion."
Frequently Asked Questions about this Article…
British Gas is finalising gas purchase agreements with new suppliers and negotiating third‑party supply deals so it can ramp up volumes at its Queensland export plant as soon as construction and commissioning finish. Management says getting gas flowing and filling the trains quickly is a key priority to generate cash flow.
The company is hoping for first gas as soon as late this year when commissioning begins and plans to start power generation then. Management expects to see how ramping and cash flow progress over the next six to nine months.
British Gas has indicated initial gas flows of about 20 million cubic feet are needed over the first two to three months to support commissioning and early operations.
The company is negotiating a number of third‑party gas supply agreements and is also seeking additional gas reserves. Earlier this year it finalised the sale of a half‑interest in the export gas project (including exploration acreage) to China National Overseas Oil Co.
British Gas sold a half‑interest in the export gas project to China National Overseas Oil Co earlier this year, and that sale included a share of exploration acreage. The company says it is looking to free up cash from the project by selling part of its equity in the infrastructure.
Yes — management is hoping to sell equity in its water treatment plant and gas supply pipeline on a sale‑and‑leaseback basis, but says that won’t be possible until there is an income stream from the assets. They regard it as premature to finalise such deals until the plants are on stream.
The article notes sector speculation that each of the three Queensland export gas projects may be short of gas to meet contractual commitments. British Gas’s search for additional reserves and supply agreements is set against that backdrop.
Investors should monitor confirmation of gas purchase agreements and third‑party supplies, progress on commissioning and ramp‑up (including whether initial 20 million cubic feet flows are achieved), any sale‑and‑leaseback or equity sales in infrastructure, and cash‑flow updates over the next six to nine months. Also note sector moves such as Origin Energy flagging a possible sale of part of its pipeline equity.
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