LNG Ltd: Talks With Several Parties Over Gladstone LNG Project

Liquefied Natural Gas Ltd. (LNG.AU) said Monday several parties have discussed becoming a strategic partner for its proposed LNG plant in Queensland state, and parallel talks over gas supply to the project are making pleasing progress.

LNG Ltd. is seeking to secure the project's future after an earlier preliminary agreement with Arrow Energy Ltd. (AOE.AU) was undermined by a A$3.44 billion takeover offer for Arrow by Royal Dutch Shell Plc (RDSB) and PetroChina Co. (PTR).

LNG Ltd.'s agreement with Arrow has now become non-exclusive, giving the company scope to discuss new strategic partnerships and other gas supply options.

Site works and construction of the Fisherman's Landing project at Gladstone port are currently on hold while those talks take place.

In a statement, LNG Ltd. said it would choose a strategic partner that can buy a major equity stake of the Fisherman's Landing project, purchase the LNG produced and financially support the company's proposed gas supply plan for the terminal.

"The company (is) holding meetings with a number of parties who meet the company's selection criteria," said LNG Ltd.

The Fisherman's Landing project is designed to be smaller than competing LNG projects at Gladstone that will be fed by coal seam gas produced nearby, enabling it to be become operational in a shorter timeframe.

The first production unit is slated to produce 1.5 million metric tons of LNG a year. That compares with rival projects put forward by companies such as Shell and BG Group Plc (BG.LN) that envisage initial production in the region of 8 million tons a year.

LNG Ltd., based at Perth in Western Australia state, said it would provide an update on its plans for the Fisherman's Landing LNG project in the second quarter of this year.

-By David Winning, Dow Jones Newswires; [phone]; [e-mail]