AGL Energy has finally found a buyer for its northern Queensland gas assets, striking a deal with what is thought to be a new entrant into the Australian gas sector, Chinese gas distributor Shandong Order Gas Co.
The deal will see privately-owned Shandong and Australian private investment company Orient Energy Pty buy AGL’s half share in the Moranbah gas project and a north Queensland energy joint venture, as well as in an exploration licence in the Bowen Basin.
The transaction is still subject to pre-emptive rights held over AGL’s stakes by its Moranbah venture partner Arrow Energy, which is itself a joint venture between oil giants Shell and PetroChina. It also remains subject to approval by Australian and Chinese regulatory authorities, expected to include the Foreign Investment Review Board.
AGL didn’t disclose the sale price but noted it had already written down the value of its gas business in February 2016 when it took a strategic decision to exit from upstream gas production.
“AGL will provide further details of the financial outcome of the sale once it achieves financial close but does not expect any further impairments as a result of the sale of these assets,” it said.
The utility had been seeking to sell out of the Moranbah assets for more than three years, with the effort to slim down on non-core assets taking on a new lease of life when Andy Vesey took over as chief executive in early 2015.
Orient Energy, backed by Chinese investors, is also understood to have purchased gas assets in the Roma region in Queensland from Santos in 2016.
Shandong, which supplies gas to 7 million residents, has more than $US5.5 billion in assets, of which $US3 billion are energy assets, according to AGL.
Separately, AGL released its formal notice of its annual general meeting at which its board will face the possibility of a “second strike” over pay after a 37 per cent vote against the remuneration report last year.
Outgoing chairman Jerry Maycock confirmed in the annual report, also released Friday, that as part of the company’s response to last year’s “first strike”, Mr Vesey will not receive any increase in his fixed pay for this coming year.
Mr Maycock, who will be replaced as chairman by Graeme Hunt after the AGM on September 27, said AGL had also improved disclosure on benchmarks for remuneration and incentive payments.
“We trust that these changes – and the ongoing strong performance of the company – will enable shareholders to make a considered assessment of this year’s remuneration outcomes,” Mr Maycock said in the report.
By Angela Macdonald-Smith