BG Group sold its wholly owned subsidiary QCLNG Pipeline to Australia-based APA Group for $5 billion Wednesday.
The deal includes QCLNG’s 337 mile long, large diameter underground pipeline network linking BG Group’s natural gas fields in southern Queensland to a two-train liquefied natural gas export facility at Gladstone on Australia’s east coast.
The pipeline was constructed between 2011 and 2014 and has a current book value of $1.6 billion.
The sale is conditional on the start of commercial LNG deliveries, post commissioning, from the QCLNG export facility at Gladstone and on partner consent.
BG Group and its partners have firm capacity rights in the pipeline for 20 years, with options to extend.
The transaction is expected to be complete in the first half of 2015.
BG Group will book a post-tax profit of about $2.7 billion.
Tariffs payable on the pipeline will provide a fixed rate of return on the asset base, with the primary tariff components rising annually with U.S. inflation indices.
At the end of 2016, the pipeline tariff is expected to generate an EBITDA of $390 million for APA Group.
UK-based BG Group said the sale proceeds will be used to reduce net debt and to fund future growth investment.
The QCLNG pipeline will be the world’s first project to turn gas from coal seams into liquefied natural gas, or LNG.
“The sale of this non-core infrastructure is consistent with BG Group’s strategy of actively managing its global asset portfolio,” BG Group said.