BG Group and CNOOC sign 20-year LNG sales contract

March 24, 2010

BG Group and CNOOC sign 20-year LNG sales contract

BG Group plc today announced it had signed a Liquefied Natural Gas (LNG) sales contract with the China National Offshore Oil Corporation, ("CNOOC"), concluding negotiations announced in May 20091 for the supply of 3.6 million tonnes per annum (mtpa) of LNG over a 20-year period.

Under the terms of the sales contract, CNOOC will be supplied with LNG manufactured at the Queensland Curtis LNG ("QCLNG") facility on Curtis Island, near Gladstone in Queensland, Australia. Additionally, BG Group may also supply CNOOC from the Group's global LNG portfolio. The QCLNG facility is being developed by BG Group's wholly owned Australian subsidiary, QGC Pty Limited ("QGC") and will be supplied with coal seam gas from QGC's extensive acreage in the Surat Basin. BG Group expects to sanction QCLNG this year upon receipt of Queensland and Australian government environmental approvals, and the plant is planned to come onstream by 2014.

The BG Group-CNOOC LNG sales agreement is one of the largest LNG contracts in Australia and was signed on 24 March 2010 in Beijing by the CNOOC President Fu Chengyu and BG Group Chief Executive Frank Chapman. It is the world's first fully-termed sale and purchase agreement for the supply of LNG from coal seam gas, and marks the first sale of LNG from coal seam gas into China, the fastest-growing gas market in the world. In addition, under the terms of parallel agreements between BG Group and CNOOC executed today:

·; CNOOC will acquire a 5% equity interest in the reserves and resources of certain BG Group tenements in the Walloons Fairway of the Surat Basin in Queensland. The total book value of the assets being sold is approximately US$ 270 million;

·; CNOOC will become a 10% equity investor in QCLNG Train 1, the first of two liquefaction trains which will form the first phase of the QGC-operated QCLNG development. CNOOC will reimburse BG Group for 10% of costs incurred in respect of Train 1, payable in cash at the point of Final Investment Decision, expected later this year; and

·; BG Group and CNOOC have agreed jointly to participate in a consortium to construct two LNG ships in China that will be owned by the consortium.

All of the agreements are conditional on Chinese, Queensland and Australian government approvals and on BG Group making the Final Investment Decision on QCLNG, expected later this year.

BG Group Chief Executive Frank Chapman said: "These agreements are a landmark development in the relationship between our two companies, building on what is already a close and productive partnership in deep water exploration, offshore China. CNOOC is a highly accomplished company and we look forward to working together as we bring this new ground-breaking LNG project to fruition."

BG Group and CNOOC have been in partnership in offshore exploration in China since 20062, and in 2008, the two companies agreed to explore further opportunities for strategic cooperation.

QCLNG is underpinned by BG Group global LNG supply agreements for up to 8.3 mtpa, consisting of the 20-year 3.6 mtpa agreement with CNOOC announced today, a 21-year 1.7 mtpa supply agreement to Chile and a 20-year agreement to supply up to 3 mtpa to Singapore.

-ends-

Notes to Editors

1. http://www.bg-group.com/MediaCentre/PressArchive/2009/Pages/13May2009.aspx

2. http://www.bg-group.com/MediaCentre/PressArchive/2006/Pages/060706-sx.aspx

BG Group

BG Group plc (LSE: BG.L) is a world leader in natural gas, with a strategy focused on connecting competitively priced resources to specific, high-value markets. Active in more than 25 countries on five continents, BG Group has a broad portfolio of exploration and production, Liquefied Natural Gas (LNG), transmission and distribution and power generation business interests. It combines a deep understanding of gas markets with a proven track record in finding and commercialising reserves. For further information visit:  www.bg-group.com

China National Offshore Oil Corporation

The China National Offshore Oil Corporation ("CNOOC") was founded in 1982. It is one of the largest state-owned oil companies in China and is its largest offshore oil and gas producer. It is authorised to cooperate with foreign partners for oil and gas exploitation in China's offshore areas. It has built up its leading position in the LNG business in China through the development of key LNG receiving terminals along the south east coast of China. It has its headquarters in Beijing and has a total staff of 60 000. For further information: www.cnooc.com.cn

QGC

QGC Pty Limited ("QGC" - ACN: 089 642 553) is a leading Australian coal seam gas explorer and producer focused on supplying gas to domestic and international markets. A BG Group business, QGC is establishing one of Australia's largest capital infrastructure projects to turn Queensland's world-class coal seam gas reserves into Liquefied Natural Gas (LNG). Queensland Curtis LNG (QCLNG) is a priority project for QGC which involves expanding exploration and development in southern and central Queensland and transporting gas through an underground pipeline network to Curtis Island near Gladstone, where it will be liquefied. For further information: www.qgc.com.au or www.qclng.com.au

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Contact

Australia

Mark Todd +61 (0) 417 602 838 [email protected]

Paul Larter +61 (0) 400 776 937 [email protected]

There are matters set out within this announcement that are forward-looking statements. Such statements are only predictions, and actual events or results may differ materially. For a discussion of important factors which could cause actual results to differ from these forward-looking statements, refer to BG Group's Annual Report and Accounts for the year ended 31 December 2008. BG Group does not undertake any obligation to update publicly, or revise, forward-looking statements, whether as a result of new information, future events or otherwise, except to the extent legally required.