Australian coalseam and shale gas explorer Icon Energy has unveiled a restructuring of its Chinese joint venture partner in its ambitious plan to begin supplying 2 million mt/year of LNG to the energy-hungry Asian economy.
Icon took the Australian market by surprise in April 2010 when it signed a memorandum of understanding to sell LNG to China's Shenzhen Sino Industrial Development Company (Shenzhen SinoGas) from its undeveloped gas resources in the states of Queensland, South Australia and Victoria. The MOU called for the delivery of 40 million mt of LNG over 20 years, or 2.2 Tcf/year, to a receiving terminal near Shantou City in southern Guangdong province from 2014.
Icon has now formed a joint venture -- ShanTou SinoEnergy -- to reflect the market destination of the gas in Shantou City, Managing Director Ray James said in a statement Friday. The restructuring of the joint venture, which now includes a new state-owned partner, was necessary to enable Shenzhen SinoGas to obtain central government approval for an LNG import licence, Icon added.
Icon and Shenzhen SinoGas were previously working toward a December 31, 2010 deadline to convert the MOU into a gas sales agreement, but that has now been postponed. James said Icon expected the sales agreement to be executed as soon as Shantou SinoEnergy had secured all necessary joint venture and government approvals.
"Shantou SinoEnergy has considerable support for this project in China," James said. "It has informed [Icon] that it is now in the final stages of reaching a joint venture consensus with a Chinese state-owned public company for its proposed natural gas terminal on Nanao Island near Shantou City, which would receive LNG supplied by Icon Energy and distributed to commercial and residential customers in the Shantou city area."
Shantou SinoEnergy is planning to construct a A$727 million ($741 million) receiving terminal, ultimately capable of offloading and regassifying up to 3 million mt/year of LNG.
"While I cannot at this time name Shantou SinoEnergy's state-owned joint venture partner, in recent months we have been introduced in China to very senior executives of significant state-owned companies," James said. "We will be aiming to cement and expand these relationships over the coming months. We are confident that the project will proceed," he added.
"Our discussions with Shantou SinoEnergy, and previously Shenzhen SinoGas, are very mature," according to James. "We have been through a number of reiterations of the GSA [gas sales agreement] and believe that we are now at a stage where we can effectively proceed to address what would have been conditions precedent to the initial deal, including the conduct of a full feasibility study and certification of the gas resource," he said.
"While Shantou SinoEnergy proceeds with its approval processes in China, Icon Energy will continue with its focus on securing the necessary reserves to meet its commitments under the GSA," James added. "In that regard, various programs have experienced delays with the late award of tenements and the requirement to go through new and protracted land access processes in Queensland, but our team is proceeding to recommence drilling activities during 2011."
Icon last month secured A$5.9 million in new funding from three privately owned Chinese investors, who agreed to hold their shares for at least 12 months. The combined placements were for the issue of 29.5 million new Icon shares at A$0.20 each, representing 6.29% of the company's capital.
--Christine Forster
Icon took the Australian market by surprise in April 2010 when it signed a memorandum of understanding to sell LNG to China's Shenzhen Sino Industrial Development Company (Shenzhen SinoGas) from its undeveloped gas resources in the states of Queensland, South Australia and Victoria. The MOU called for the delivery of 40 million mt of LNG over 20 years, or 2.2 Tcf/year, to a receiving terminal near Shantou City in southern Guangdong province from 2014.
Icon has now formed a joint venture -- ShanTou SinoEnergy -- to reflect the market destination of the gas in Shantou City, Managing Director Ray James said in a statement Friday. The restructuring of the joint venture, which now includes a new state-owned partner, was necessary to enable Shenzhen SinoGas to obtain central government approval for an LNG import licence, Icon added.
Icon and Shenzhen SinoGas were previously working toward a December 31, 2010 deadline to convert the MOU into a gas sales agreement, but that has now been postponed. James said Icon expected the sales agreement to be executed as soon as Shantou SinoEnergy had secured all necessary joint venture and government approvals.
"Shantou SinoEnergy has considerable support for this project in China," James said. "It has informed [Icon] that it is now in the final stages of reaching a joint venture consensus with a Chinese state-owned public company for its proposed natural gas terminal on Nanao Island near Shantou City, which would receive LNG supplied by Icon Energy and distributed to commercial and residential customers in the Shantou city area."
Shantou SinoEnergy is planning to construct a A$727 million ($741 million) receiving terminal, ultimately capable of offloading and regassifying up to 3 million mt/year of LNG.
"While I cannot at this time name Shantou SinoEnergy's state-owned joint venture partner, in recent months we have been introduced in China to very senior executives of significant state-owned companies," James said. "We will be aiming to cement and expand these relationships over the coming months. We are confident that the project will proceed," he added.
"Our discussions with Shantou SinoEnergy, and previously Shenzhen SinoGas, are very mature," according to James. "We have been through a number of reiterations of the GSA [gas sales agreement] and believe that we are now at a stage where we can effectively proceed to address what would have been conditions precedent to the initial deal, including the conduct of a full feasibility study and certification of the gas resource," he said.
"While Shantou SinoEnergy proceeds with its approval processes in China, Icon Energy will continue with its focus on securing the necessary reserves to meet its commitments under the GSA," James added. "In that regard, various programs have experienced delays with the late award of tenements and the requirement to go through new and protracted land access processes in Queensland, but our team is proceeding to recommence drilling activities during 2011."
Icon last month secured A$5.9 million in new funding from three privately owned Chinese investors, who agreed to hold their shares for at least 12 months. The combined placements were for the issue of 29.5 million new Icon shares at A$0.20 each, representing 6.29% of the company's capital.
--Christine Forster
