AGL Energy has executed sales agreements for its Papua New Guinea oil and gas assets, including its 3.6% stake of the $US11 billion PNG LNG project, to an undisclosed party today for a total of $A1.1 billion after closing out oil hedges.

The sale and purchase agreement for AGL’s portfolio was $US800 million, and no capital gains tax is payable on the transaction in PNG or Australia.

AGL is keeping the purchaser confidential at this stage but said it was an international oil and gas company.

There are no conditions on the sales and purchase agreement other than government approvals, however, the deal is subject to the pre-emptive rights process where other PNG LNG joint venture parties can make a matching bid.

Should there be no other matching or excessive bids then the transaction will go through.

AGL expects the pre-emption process to take 30-45 days to complete.

“This is an excellent outcome for AGL, particularly in light of current global market conditions,” AGL managing director Michael Fraser said.

“Importantly, the PNG sale is a milestone for us as it finalises the non-core asset sale program we commenced late last year and again demonstrates the company’s ability to deliver on its strategy.”

Fraser added the transaction along with this week’s earlier Queensland Gas Company investment gave the company considerable balance sheet strength.

AGL expects to update the market on the PNG asset sales after the completion of the pre-emption process, around mid-December.

The AGL portfolio includes an 11.9% interest in the Kutubu oil field, 5.2% in Moran Unit and 11.9% in SE Mananda in Petroleum Development Licence 2.

The Australian power company’s assets in PDL 4 include 66.7% of Gobe Main and 27.3% of SE Gobe Unit.

AGL Energy announced its decision to exit PNG LNG earlier in the year to focus on its core electricity generation business in Australia.

Back in June, Dow Jones Newswires reported that JPMorgan analysts estimated AGL’s PNG assets were worth $A975 million, with its oil and gas fields fetching $521 million and the 3.6% PNG LNG stake going for $454 million.

The ExxonMobil-led PNG LNG joint venture aims to build a two-train 6.3 million tonne per annum liquefaction plant near Port Moresby, with gas sourced from various Oil Search gas and oil fields in PNG.

The PNG LNG project ownership currently consists of ExxonMobil at 41.6%, Oil Search 34.1%, Santos 17.7%, AGL Energy 3.6% and Nippon Oil 1.8% while land owner interests hold the remaining 1.2%.

These interests are subject to change once the PNG government steps on board the project (around 19.4%) and the gas interests have been fully calculated.

The final investment decision for the project is scheduled for late 2009.

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