Arckaringa Unincorporated Evaluation Joint Venture (AUEJV) Structure and Functions
Two partners are involved in the Arckaringa Unincorporated Evaluation Joint Venture (AUEJV) for the Arckaringa Project. These are Altona Energy Plc (Altona) through its 100% Australian subsidiary Arckaringa Energy Pty Ltd and CNOOC New Energy Investment Co Ltd (CNOOC-NEI), a subsidiary of the China National Offshore Oil Corporation (CNOOC). CNOOC-NEI owns 51% of the AUEJV and Altona 49%.
The AUEJV is a legal entity created to undertake a Bankable Feasibility Study (BFS) for the Arckaringa Project and to define the future direction of the project. Any further role for either partner, or the Joint Venture, depends on the outcome of that work.
The Rationale for the AUEJV
Whilst Altona managed to develop a sound technical footing for the final stage of the BFS, the company recognised that it would need a substantial partner to fund the BFS completion and to commercialise the Arckaringa Project. CNOOC-NEI is that partner.
The commercial rationale for the 51% - 49% structure of the AUEJV is
that Altona would contribute the EL’s and the results of all the work to
date in return for CNOOC-NEI committing to fund the BFS and, if a project
proceeds to development, to facilitate project funding for both parties.
Altona’s contribution to the AUEJV:
- Project concept and direction
- Existing completed Pre-Feasibility Study (PFS) work
- Exploration tenements
- State, Federal and Local Government contacts and goodwill.
Altona’s contribution of the pre-feasibility study program of works includes the substantial engineering and technical studies which took three years to complete. The contribution also includes the geological studies and historical exploration data acquired by Altona when it purchased the exploration tenements in 2005, as well as the tenements themselves. These contributions earned Altona 49% of the AUEJV.
CNOOC NEI’s contribution to the AUEJV
CNOOC-NEI is a subsidiary of the China National
Offshore Oil Corporation (CNOOC), founded in 1982. CNOOC is one of the
largest state-owned oil companies in China, as well as the largest offshore
oil and gas producer. It is authorized to cooperate with foreign partners
for oil and gas exploitation in China’s offshore areas. Headquartered in
Beijing, it has a total staff of 51,000 with a registered capital of RMB
94.9 billion. CNOOC-NEI was established to evaluate participation in, and
development of new energy projects, including projects based on mineral
resources and renewable energy in China and offshore.
- CNOOC-NEI is funding the BFS to completion
- It has world scale hydrocarbon production and distribution experience
- It is also contributing its significant engineering skills.
The BFS will be completed to a standard capable of underpinning the financing of the project. In addition to supplying capital, CNOOC is contributing substantial experience in hydrocarbon production and distribution. The AUEJV will benefit greatly from CNOOC’s experience, in addition to their research and engineering skills that may assist with developing the project. Once the project is completed there may be opportunities for CNOOC’s distribution network to distribute products in China. Whilst this may not be essential to the viability of the project, export sales of a high value product will benefit the South Australian economy and help Australia’s balance of trade.
Benefits
- Altona will see its vision and corporate objectives realised
- CNOOC gets early stage access to a world-class energy bank.
- South Australia gets a major long-term energy infrastructure development, source of quality employment and value added exports.
Altona has the tenements, the results of the Pre Feasibility Studies and the project definition; CNOOC has the commercial skills, access to technology, access to funding to complete the BFS and the international credibility to make it happen. The AUEJV is a synergistic exercise.
Foreign Investment Issues
Foreign Investment Review Board (FIRB) approval
CNOOC-NEI’s investment in the AUEJV requires Foreign Investment Review Board (FIRB) approval. The FIRB review process is a Commonwealth Government requirement and is independent of Altona and CNOOC-NEI.
CNOOC brings financial strength and strong experience in large-scale hydrocarbon engineering projects to the AUEJV, as well as substantial ability to market the final product. They are a perfect partner for Altona in this venture.
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