BG - HoA for sale of QCLNG stake & new LNG supply

31 October 2012

BG Group signs Heads of Agreement for sale of QCLNG stake and new LNG supply

BG Group today announces that it has signed a Heads of Agreement (HOA) with China National Offshore Oil Corporation (CNOOC) for the sale of certain interests in the Queensland Curtis LNG (QCLNG) project in Australia for $1.93 billion and the sale of liquefied natural gas (LNG) from

BG Group's global LNG portfolio. Fully-termed transaction agreements are expected to be executed in the first half of 2013, and upon closing, CNOOC will reimburse BG Group for its share of QCLNG project capital expenditures incurred from 1 January 2012.

The interests conveyed include a stake in certain upstream tenements and the Train 1 liquefaction facility, as detailed below, but exclude any interest in the Train 2 liquefaction facility, transmission pipeline and QCLNG common facilities.

Under the LNG sale agreement, BG Group will supply CNOOC with 5 million tonnes per annum (mtpa) of LNG for 20 years beginning in 2015, sourced from the Group's global LNG portfolio. Combined with the 3.6 mtpa LNG sale agreement signed with CNOOC in March 2010*,

BG Group's total committed LNG sales to China will be 8.6 mtpa - making the company the largest supplier of LNG to the world's fastest growing energy market.

The significant transactions contemplated by the agreement will be conditional on applicable government and regulatory approvals.

BG Group Chief Executive Sir Frank Chapman said: "This agreement will substantially increase our partnership with CNOOC in the QCLNG project. The new LNG sales agreement will also enhance our close relationship with CNOOC by providing material new supplies of natural gas to China. We look forward to building our partnership with CNOOC as we progress towards first LNG from the QCLNG project in 2014."

Sir Frank added: "Equally significant is that this transaction, combined with others recently announced, will provide for an aggregate capital release of $7.6 billion by mid-2013, exceeding the portfolio rationalisation plans we announced in February this year. This progress reflects our commitment to maintain a strong balance sheet and credit rating."

Under the terms of the HOA:

·; CNOOC will acquire a 40% equity interest in QCLNG Train 1, increasing its equity ownership from 10% to 50%;

·; CNOOC will acquire a 20% equity interest in the reserves and resources of certainBG Group tenements in the Walloons Fairway region of the Surat Basin, Queensland, increasing its equity ownership from 5% to 25%;

·; CNOOC will acquire a 25% working interest in certain upstream tenements held byBG Group in the Bowen Basin, Queensland;

·; BG Group and CNOOC will jointly invest in the construction of two LNG ships in China, adding to the two ships already committed under the LNG agreements signed inMarch 2010; and,

·; CNOOC will have the option to participate as a 25% partner in the first of any potential expansion trains at QCLNG.

BG Group's Australian business QGC Pty Limited will remain operator and retain majority ownership of the QCLNG project. BG Group will retain:

·; Around 74% of its original interest in the upstream resource and related infrastructure; and

·; 100% of the project's common facilities on Curtis Island (LNG tanks, jetty) and the

540 kilometre natural gas pipeline network linking the gas fields to Curtis Island, which together represent approximately 30% of the estimated 2011-2014 project spend.

-ends-

Notes to Editors:

* http://www.bg-group.com/MediaCentre/PressArchive/2010/Pages/24Mar2010a.aspx

On 24 March 2010, BG Group signed a LNG sales contract with CNOOC for the supply of 3.6 million tonnes per annum (mtpa) of LNG over a 20-year period. Under the terms of that sales contract, CNOOC will be supplied with LNG manufactured at the QCLNG facility on Curtis Island. BG Group may also supply CNOOC from the Group's global LNG portfolio. Under the terms of parallel agreements executed at the same time, CNOOC acquired a 5% equity interest in the reserves and resources of certain BG Group tenements in the Walloons Fairway of the Surat Basin in Queensland; became a 10% equity investor in QCLNG Train 1; and, both BG Group and CNOOC agreed to participate in a consortium to construct two LNG ships in China that will be owned by the consortium.

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 20 countries on five continents, BG Group has a broad portfolio of exploration and production, liquefied natural gas (LNG) and transmission and distribution 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

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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 2011. 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.