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Nov. 17 (Bloomberg) -- ConocoPhillips and Origin Energy Ltd., partners in a $20 billion liquefied natural gas project in Australia’s Queensland state, agreed to sell fuel from the development to Kansai Electric Power Co.
The Australia Pacific LNG venture plans to supply the Japanese utility with about 1 million metric tons annually for 20 years starting in mid-2016, Sydney-based Origin said today in a statement. The accord depends on the two companies committing to build a second LNG production unit, a decision that is expected early next year, Origin said.
Origin and ConocoPhillips, the third-largest U.S. oil company, approved the first stage of the venture in July. Shipments from the initial phase, estimated to cost $14 billion, are set to begin in mid-2015, Origin said at the time. Annual output capacity from stages one and two of the Australia Pacific LNG venture will be 9 million tons.
“Kansai is an experienced LNG buyer in Japan,” Karen Moses, Origin’s executive director of finance and strategy, said today on a call with reporters. “We continue to make progress, and clearly this is an important next step.”
Conoco and Origin are among companies building Australian LNG ventures to tap rising Asian demand for less-polluting alternatives to coal. Japan is seeking shipments to replace nuclear capacity damaged by the March 11 earthquake and tsunami.
The companies in April agreed to supply 4.3 million tons of LNG a year to China Petrochemical Corp. They also agreed to sell Sinopec Group, as the Chinese company is known, a 15 percent stake in the venture. The Conoco and Origin project will create 6,000 construction jobs, they said.
The venture continues to have discussions with companies, including Kansai, about selling further equity, Moses said.
--Editors: Amit Prakash, Christian Schmollinger
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