ASX/MEDIA RELEASE 28 January 2011 Placement and Strategic Partner Term Sheet signed with CHINA HUANQIU CONTRACTING & ENGINEERING CORPORATION The Directors of Liquefied Natural Gas Limited (ASX: LNG, LNG LTD) are pleased to announce that a Share Placement Term Sheet (Term Sheet) was executed on 27 January 2011, in Beijing, China, with China Huanqiu Contracting & Engineering Corporation (HQCEC). HQCEC is a wholly owned subsidiary of China National Petroleum Corporation (CNPC), which is China?s largest producer and supplier of crude oil and natural gas. Signing of the Term Sheet by Mr Wang Shihong, President and Chief Executive Officer of HQCEC and Mr Richard Beresford, Chairman of LNG LTD The legally binding Term Sheet includes, amongst other things, the following key terms between HQCEC and LNG LTD: ? HQCEC to subscribe for 53,250,000 shares in LNG LTD, equivalent to approximately 19.9% of the total issued shares in LNG LTD after the placement (Placement), at a price per share which is the lesser of: - A$0.48 cents (~A$25.6 million), or - 80% of the volume weighted average market price (as such term is defined in the ASX Listing Rules) of ordinary shares in LNG LTD on the ASX, calculated over the last five days in which sales of ordinary shares in LNG LTD are recorded on the ASX prior to the issuance date of the Placement shares. The A$0.48 cents is a 10.6% discount to the volume weighted average market price of LNG LTD?s shares (A$0.537) for the 180 days to 27 January 2011 and a 19.3% discount to the volume weighted average market price (A$0.595) for the 5 days prior to the date of signing the Term Sheet. 2 ? Application of the Placement proceeds to the development of LNG LTD?s wholly owned 3 million tonne per annum Gladstone LNG project at Fisherman?s Landing, Port of Gladstone, Queensland, Australia (Gladstone LNG). ? Appointment of a HQCEC nominee as a Non Executive Director to the Board of LNG LTD. ? Appointment of a HQCEC nominee as an Executive Director to the Board of LNG LTD and Co Chief Executive Officer of LNG LTD, to work with the existing Managing Director/Chief Executive Officer, Maurice Brand. ? Appointment of HQCEC, or an affiliate of HQCEC or CNPC, as the sole Engineering, Procurement, Construction and Commissioning (EPC) contractor for Gladstone LNG, conditional on HQCEC providing a competitive EPC proposal based on LNG LTD?s wholly owned OSMR? process technology. ? Agreement to negotiate preferential terms for HQCEC, CNPC and their affiliates to use LNG LTD?s OSMR? process technology. ? Consideration by HQCEC and CNPC, or an affiliate of CNPC, as to their involvement in Gladstone LNG, including direct investment in Gladstone LNG, purchase of the proposed initial 3 million tonne per annum LNG production capacity from Gladstone LNG?s first two LNG trains and financing of Gladstone LNG to promote the development of Gladstone LNG. ? LNG LTD?s ongoing pursuit of gas supply for Gladstone LNG?s first two 1.5 million tonnes per annum LNG trains. The Term Sheet is, amongst other things, conditional on: ? HQCEC obtaining relevant approvals (on terms satisfactory to HQCEC) from the Australia Government?s Foreign Investment Review Board, China?s Ministry of Commerce and National Economic Reform Commission and CNPC; and ? LNG LTD obtaining shareholders? approval, if required. HQCEC and LNG LTD are now advancing various definitive agreements, including a Share Subscription Agreement, based on the agreed Term Sheet. The parties are targeting completion of the Placement in the second quarter of 2011. LNG LTD?s Chairman, Richard Beresford, said that ?the proposed investment by HQCEC in LNG LTD will be a significant milestone and major step in LNG LTD?s future direction and a vote of confidence in the Company?s OSMR? process technology, including its low capital and operating costs, faster construction schedule, improved efficiency and lower carbon footprint than other mainstream LNG processes. In addition to Gladstone LNG, HQCEC and LNG LTD will immediately work on new project opportunities based on LNG LTD?s business model and the OSMR? process technology. I welcome HQCEC as the largest shareholder in LNG LTD and look forward to working with the HQCEC nominated Directors so that LNG LTD can fully realize its potential?. LNG LTD?s Managing Director and CEO, Maurice Brand said ?the appointment of a HQCEC nominated Executive Director and Co CEO will allow the Company to liaise with and access the significant global resources of HQCEC and the CNPC group which will materially assist LNG LTD to progress its current project portfolio and target a number of new LNG project opportunities.? ?Importantly, HQCEC and LNG LTD will now work together to deliver Gladstone LNG?, said Mr Brand. Refer to the annexure to this ASX/Media release for further information on HQCEC and CNPC. For further information contact: Mr Maurice Brand Mr David Gardner Managing Director & Chief Executive Officer Company Secretary Telephone: + 61 8 9366 3700 Telephone: + 61 8 9366 3700 Liquefied Natural Gas Limited Ground Floor, 5 Ord Street, West Perth WA 6005 Telephone: (08) 9366 3700 Facsimile: (08) 9366 3799 Email: [email protected] Web site: www.LNGLimited.com.au 3 Annexure ABOUT HQCEC: HQCEC, headquartered in Beijing and wholly owned by CNPC, is an intelligence and technology intensive/oriented state-owned enterprise and is engaged in such diversified businesses as consultation, research and development, engineering, procurement, construction management, equipment manufacture and commissioning guidance. HQCEC has, for over 50 years, fulfilled the tasks of consultation, engineering, construction and EPC contracting for over 2,000 cross-industry large and medium scale domestic and foreign projects. HQCEC has extensive experience in contracting on an EPC basis including 14 categories of plants, including ethylene, polypropylene, LNG and chemical fertilizer plants, all of international scale. HQCEC?s business covers 30 provinces, cities and autonomous regions across China and nearly 20 countries and regions in Southeast Asia, Western Europe, America and the Middle East. HQCEC was the first Chinese company to independently enter into high-end refinery markets such as Saudi Arabia, Singapore, Canada and Italy. HQCEC executed and delivered the Guangdong LNG import terminal, China?s first LNG receiving terminal, and has an active project portfolio, including: ? EPC contractor for the Jiangsu LNG receiving terminal near Shanghai which is scheduled for commissioning in April 2011; ? EPC contractor for the Dalian LNG receiving terminal, being the first LNG terminal in northern China and featuring the use of HQCEC?s proprietary technology; and ? EPC contractor for the 500,000 tonne per annum Ansai LNG Project in the Shaanxi Province China, featuring HQCEC?s proprietary liquefaction technology, which is scheduled for commissioning in the fourth quarter 2011. HQCEC currently has more than 9,500 staff, including 165 professor-title senior engineers and 1,103 senior engineers. Having strong R&D capabilities, HQCEC tackles key technical problems for many large chemical plants and have been awarded 42 state patents, with application for 22 more accepted, 2 national construction methods and 13 provincial/ministerial construction methods. HQCEC now has 41 competitive know-hows, more than 10 innovative process technologies that were independently developed or are being developed and 34 independently developed computer software program. HQCEC has won 423 international, national, provincial and ministerial invention awards, technological progress awards and excellent engineering design awards, and taken the lead or participated in drafting 18 national standards, 34 industrial standards and 8 association standards. By virtue of its advanced technology, numerous project achievements and proven credibility, HQCEC was rated as one of the ?Ten Best Project Contractors? in a national survey by the design industry, on the 60th National Day, and is one of the first companies to win the title of ?AAA Credit Enterprise? and Beijing?s ?High-Tech Enterprise?. ABOUT CNPC: China National Petroleum Corporation (CNPC) is an integrated international energy company. CNPC is China's largest oil and gas producer and supplier, as well as one of the world's major oilfield service providers and a globally reputed contractor in engineering construction, with businesses covering petroleum exploration & production, natural gas & pipelines, refining & marketing, oilfield services, engineering construction, petroleum equipment manufacturing and new energy development, as well as capital management, finance and insurance services. Based in China, CNPC has oil and gas assets and interests in 30 countries in Africa, Central Asia-Russia, South America, the Middle East and the Asia-Pacific. CNPC was ranked 10th, in terms of revenue, amongst the 2010 Fortune Global 500 companies.
LNG Price at posting:
59.5¢ Sentiment: None Disclosure: Held
