British energy producer BG Group said Wednesday that it has inked a Heads of Agreement (HOA) with China National Offshore Oil Corporation (CNOOC) – worth $1.93 billion – for the sale of certain interests in the Queensland Curtis LNG (QCLNG) project, as well as assets from the group's LNG portfolio.

The agreement signed on Wednesday will give CNOOC a much larger footprint into Australia's natural gas market. The inked deal sees CNOOC increasing its stake in the first production train of the QCLNG project from 10 percent to 50 percent and boosting its interest in BG Group's tenements in the Walloons Fairway region of the Surat Basin from 5 percent to 25 percent. In addition, CNOOC will gain a 25 percent working interest in certain upstream tenements held by BG Group in the Bowen Basin, as well as the option to participate as a 25 percent partner in the first of any potential expansion trains at QCLNG.

On the supply side, the agreement sees BG Group supplying CNOOC with 5.0 million tonnes per annum of LNG for 20 years starting 2015. This means that BG Group's long-term committed LNG sales volume to China is now 8.6 million tonnes per annum. BG Group had earlier in 2010 inked a 3.6 million tonnes per annum LNG sales agreement with CNOOC.

BG Group's move to offload its interests in QGLNG is part of a disposal strategy that the company had set in motion since the start of this year.

BG Group had earlier in May this year revealed that the company would need to spend $5.4 billion more than it had originally estimated for the construction of QCLNG due to local market cost pressures, regulatory compliance and scope change. In the same month, BG Group sold a 40 percent equity interest in two gas-fired power generation plants in the Philippines for cash proceeds of $360 million, and 60.1 percent of its holding in Brazil's Comgás for $1.7 billion. Later in June, BG Group committed to $2.07 billion worth of hybrid bonds.

In October, BG Group reported that it agreed to offload a 65.12 percent stake in Gujarat Gas to India's Gujarat State Petroleum Corporation (GSPC) for $470 million.

Meanwhile, CNOOC's move to snag a larger share in the QGLNG project should also come as no surprise to industry watchers as the Chinese government has already announced publicly that shoring up on natural gas supplies – both from domestic sources thorough increased production and external source through import volumes – is high up on its national agenda.

"China is already the world's fourth largest natural gas consuming country. Its consumption reached 130.7 billion cubic meters in 2011, a year-on-year growth of 21.5 percent. China's natural gas consumption in 2011 was about four times more than in 2000, and the demand for natural gas in China could double in the 12th five-year-plan (2011 to 2015) period," China Power & Petrochemical International Corporation's President Yao Tongxin said in an address in a gas summit held in October.

"The promotion of gas-fired power generation is promoting the development of natural gas consumption," Yao, who is also the Director and Professor of the Research of Energy & Finance of China’s Center for Strategic Studies of Peking University, added in his address.

The $20.4 billion QCG project involves an initial drilling program of over 2,000 gas exploration wells. It also entails constructing 336 miles (540 kilometers) of main pipe network that connects the gas fields to two LNG processing trains on CurtisIsland. The two LNG trains have a total processing capacity of 8.5 million metric tonnes per annum.

BG Group reported on Wednesday that its hydrocarbons production was greater by 5 percent compared to 3Q 2011, with the firm's earnings greater by 16 percent at $1.2 billion.