Australia Pacific LNG
Final Investment Decision

The Australia Pacific LNG project is being approved in two phases. FID for the first phase, announced on 28 July 2011, provides an economically attractive project and will allow all the synergies of a two train project to be captured once further off-take agreements are finalised. Australia Pacific LNG is well positioned to progress to a full two train project which will have a nameplate capacity of 9 million tonnes per annum at an estimated capital cost of around US$20 billion.

Approval of the first phase of the project results in investment of US$14 billion and will service the sale and purchase agreement executed with Sinopec, for 4.3 million tonnes per annum of LNG – the largest single LNG sales agreement by annual volume ever signed for delivery from Australia.

Origin’s 42.5 per cent share of the first phase of the project requires investment of around US$6 billion over the next four years.

FID triggers further development and production of Australia Pacific LNG’s CSG fields in regional Queensland, the construction of a gas transmission pipeline, and the construction of LNG facilities and associated port infrastructure around Gladstone to export LNG to international markets. First LNG exports are planned to commence in 2015.

Agreements have been reached with major contractors and a number of project works have already commenced. These contractors include Bechtel, Nippon Steel, McConnell Dowell constructors and consolidated contractors Australian joint venture MCJV.

Australia Pacific LNG is currently in advanced discussions with potential customers regarding further off-take arrangements for the second LNG train. Australia Pacific LNG expects to make a FID on the second train in the first half of calendar year 2012.

Queensland Treasurer Andrew Fraser, Origin Managing Director Grant King and Queensland Premier, the Hon Anna Bligh MP at Australia Pacific LNG FID announcement

FID for the first LNG train has triggered deferral of the first contingent FID payment by ConocoPhillips to Australia Pacific LNG. This payment was due to Australia Pacific LNG at the time a FID for the first LNG train was approved and would have seen Origin’s funding for Australia Pacific LNG reduced by US$500 million. The payment will now be made when the project pays out an agreed economic return on the total investment to ConocoPhillips in Australia Pacific LNG.

Origin will contribute its 42.5 per cent share of Australia Pacific LNG project costs using a range of existing and new funding facilities, including:

• existing committed undrawn debt facilities and cash totalling around $3.9 billion at 30 June 2011;
• cash flows from Origin’s underlying business;
• new debt facilities, which may include the consideration of project financing at the Australia Pacific LNG level; and
• up to $1 billion from the underwritten Dividend Reinvestment Plan (DRP) covering the next four dividend payments.

The underwritten DRP will commence with the final dividend for the financial year ended 30 June 2011 and will apply a 2.5 per cent discount.

The Australia Pacific LNG project represents the largest single investment ever undertaken by Origin and has the ability to generate substantial benefits for all stakeholders.

The project currently employs 1,600 people both directly and indirectly and will create 6,000 construction jobs and 1,000 jobs during the ongoing operation of the project.

With significant employment needs, Australia Pacific LNG will be working to increase local skills capacity via apprenticeships, scholarships and vocational training. The project also expects to make a considerable contribution to regional economies and will contribute significant annual royalties to the State of Queensland.

Developing natural gas for domestic use and export has environmental benefits. Domestically, there is an increase in the use of gas for power generation where it has around half the carbon emissions of coal. Internationally, Australia Pacific LNG’s gas will be used in place of more carbon intensive fuels in households, businesses and electricity generation.

The joint venture remains committed to pursuing high environmental, community consultation and regional development standards, not only during the construction period but also throughout the ongoing operational life of this project.