BG gives the green light to $15bn gas plant in Oz

(Bloomberg)

BG Group, the UK energy giant, yesterday approved a $15bn (£9.3bn) plan to develop a liquefied natural gas project in Australia, its largest ever overseas investment.

The company announced that it had taken the decision to push ahead with the first phase of the Queensland project after Australia's federal and local governments approved the plan. The chief executive Frank Chapman called it a "significant milestone" for BG's development over the next decade.

There are already agreements in place to bring the liquefied gas to Chile, Japan, Singapore and China, and demand could reach up to 9.5 million tonnes per year. The first exports will begin in 2014.

BG said there was "significant potential to expand the site" under existing agreements with the authorities. The first phase of development – building a liquefaction plant on Curtis Island – will get under way immediately. The pipeline to move the gas from the site will be 540km long.

The decision took nearly three years of regulatory and public review, management said, and included discussions with landholders, indigenous groups, conservationists, industry bodies, regional councils and government agencies.

BG went to Australia in 2008, when it bought the fields, which will produce the gas to be liquefied and exported. This is the world's first liquefied plant supplied by coal seam gas and will be operated by BG's Australian subsidiary QGC.

Mr Chapman hailed the pace at which the project had moved, adding that yesterday's decision "represents the realisation of a pivotal strategic objective for BG" to expand its liquefied natural gas business to the Asia-Pacificregion.

The Australian government said that the move would create 5,000 jobs as the plant was being built and 1,000 permanent positions once it is finished.

The total coal seam gas reserves amount to an estimated 17.3 trillion cubic feet, equivalent to more than 2.9 billion barrels of oil. Mr Chapman said it would be at the "centre of a major new Australian export industry". Australia's resources and energy minister said it was "an important and exciting leap ahead in the development of Australia's vast coal seam gas reserves".