MEO Australia Limited said today that it has executed a Termination Deed with Air Products that terminates the 2004 Joint Development Agreement (JDA) between the two companies pertaining to the Tassie Shoal Methanol Project (TSMP) and the subsequent 2006 Amendment Agreement that effectively suspended the JDA.
In consideration for executing the Termination Deed, MEO will pay Air Products a termination fee of US$1 million together with a contingent payment of US$6 million payable from the sale of an interest in the TSMP. Air Products will receive the first US$1 million from any sale proceeds, while additional proceeds will then be shared by the two companies on a 50/50 basis until Air Products achieves the total contingent payment of US$6 million.
When the JDA was agreed in 2004, it was envisaged that the TSMP would attract 3rd party gas and monetise high CO2 gas in the region by conversion into methanol. This business model has not been successful and MEO intends to pursue a fresh approach. The first step in this strategy has been to terminate the JDA and related agreements.
As a result of this transaction, MEO has regained a 100% unencumbered interest in the projects to build two world scale methanol plants that comprise the TSMP and now has the flexibility to contemplate separate ownership of each plant. MEO will re-structure the Tassie Shoal gas processing projects during 1Q-2012 to facilitate separate ownership of each of the two 1.75 Mtpa methanol plants and also the 3 Mtpa LNG plant.
Expressions of interest to participate in these gas processing projects will be sought commencing 2Q-2012. This initiative is in response to recent transactional evidence for a marked increase in the value of gas in the region, coupled with the demand for readymade commercial solutions to monetise high CO2 gas and secure long term tenure to gas resources.
[mappress]
LNG World News Staff, December 19, 2011