BG Group has selected a unit of China’s Baoshan Iron & Steel, or Baosteel, to build a 550km steel pipeline for its liquefied natural gas project in Queensland.

BG said today that Baosteel will manufacture the pipeline in Shanghai, with deliveries to Brisbane and Gladstone commencing in October and continuing for up to 12 months.

The deal is the project’s second with China, which is fast becoming a major business partner for the UK-based BG since it bought into two deepwater exploration blocks there in 2006.

Last year, BG agreed to sell 3.6 million metric tons of LNG each year from the proposed Australian LNG terminal to China National Offshore Oil Corp, along with a 10 per cent share of the project’s first two LNG processing trains.

The 42-inch pipeline will run from BG’s coal-seam gasfields in southern Queensland to the LNG project at Gladstone.

“The pipeline, which will be the largest-diameter gas pipe laid onshore in Australia, cannot be manufactured by Australian steel mills because of its size,” BG said, recognising Australian public sensitivity to local corporate involvement in the project.

A contract for the pipeline’s installation is expected to be awarded later in 2010, and Australian companies have been invited to bid for this job.

A final investment decision on the LNG project is expected “later this year”, BG said.

The agreements with CNOOC are expected to be finalised into binding pacts before the final investment decision is made, a BG spokesman said.

(www.theaustralian.com.au)