LNG changes sale terms with Arrow

Liquefied Natural Gas (LNG) Ltd may be making fresh plans for its Fisherman's Landing project, after renegotiating the sale terms with Arrow Energy Ltd.

The status of the sale has been under a cloud since earlier in March, when Royal Dutch Shell and PetroChina made a non-binding, indicative takeover bid for Arrow worth at least $3.3 billion.

If the Shell-PetroChina bid succeeds the companies are expected to abandon Arrow's plans to process its huge coal seam gas deposits into LNG at Fisherman's Landing, near Gladstone in Queensland.

The energy giants would probably opt to process the reserves into LNG at a plant planned for Curtis Island, which has a much greater capacity.

Last week LNG shares fell to an eight-month low amid concerns the Fisherman's Landing project may not get-up.

LNG on Tuesday said it had renegotiated the terms of a Heads of Agreement (HoA) with Arrow concerning the proposed $51 million sale of Fisherman's Landing.

The fresh proposal means the sale of Fisherman's Landing is no longer exclusive, and either party can terminate the deal with one day's notice.

There will be no liability on either party if the sale is terminated, and the HoA has been extended until June 30.

"While the company is disappointed that the Arrow Sale transaction has not yet been finalised, the revised HoA will enable the company to actively appraise all other opportunities (no longer restricted to solely dealing with Arrow) for the development of the Gladstone LNG project," LNG said in a statement.

State One Stockbroking energy analyst Peter Kopetz said he believed LNG would struggle to get another gas company interested in the deal.

"I cannot see it happening," Mr Kopetz said.

"For LNG projects to work, economies of scale are important, and hence Arrow's and LNG's project was just big enough for it to work.

"Unless an international players comes in, I just cannot see LNG doing anything with their own technology," Mr Kopetz said.

LNG shares rocketed after its announcement, surging as high as 18 per cent in the morning.

On Tuesday, shares in LNG finished up 1.5 cents, or 2.94 per cent, at 52.5 cents while Arrow Energy were down two cents at $5.23.