Origin Energy Limited announced that the Board of Australia Pacific LNG has approved a Final Investment Decision ("FID") on the first phase of a two train CSG to LNG project in Queensland.

- FID taken on the Australia Pacific LNG project initiating development of the first LNG train and infrastructure to support a second train1

- US$14 billion for the first phase, US$20 billion capital cost for a full two-train development

- Sinopec equity subscription unconditional

- Australia's largest single LNG contract to commence shipments in 2015

- Contingent FID payment for Train 1 deferred

Origin Energy Managing Director, Mr Grant King said, "Today's announcement initiating the Australia Pacific LNG project's first phase is a transformational event in Origin's history and marks the commencement of one of the country's largest LNG export projects.

"The FID for this first phase provides an economically attractive project and allows all the synergies of a two train project to be captured once further off-take agreements are finalised," said Mr King.

Australia Pacific LNG is well positioned to progress to a full two-train project. The full two-train LNG development will have a capacity of 9 million tonnes per annum at a capital cost of US$20 billion.

The approval will result in investment in the first phase of the project of US$14 billion to service the sale and purchase agreement executed with China Petroleum & Chemical Corporation (Sinopec Corp.), for 4.3 million tonnes per annum – the largest single LNG sales agreement by annual volume ever signed for delivery from Australia.

The agreement for Sinopec2 to subscribe for a 15% equity interest in the Australia Pacific LNG joint venture is now unconditional with completion due to occur shortly.

Mr King said, "We welcome Sinopec into the Australia Pacific LNG joint venture. Sinopec's strong position in the Chinese market complements the proven CSG development capabilities of Origin and ConocoPhillips together with ConocoPhillips' expertise in the licensing and use of Optimised Cascade® LNG technology.

"Based on Australia's largest 2P CSG reserves, the Australia Pacific LNG project will become a supplier of low emissions fuel to growing international energy markets as well as continuing to contribute cleaner energy through its domestic production, equivalent to more than 40 per cent of Queensland's current gas requirements.

"FID on the project will deliver significant value to Origin shareholders. The project is underpinned by robust economics, while Origin's strong balance sheet provides the financial flexibility to fund Australia Pacific LNG and the company's ongoing business," Mr King said.