LNG infrastructure assets are likely to come on the market when the projects are up and running, writes Angela Macdonald-Smith.

Billions of dollars worth of natural gas pipeline and associated utility assets are expected to come onto the market in Australia in the next few years, providing investment opportunities for infrastructure buyers and pension funds.

Companies such as BG Group, Santos and Origin Energy that are building large liquefied natural gas projects in Queensland will probably want to sell some of the related infrastructure once production starts, to free up capital for new projects, say industry players and analysts.

Oil Search, an oil and gas explorer in Papua New Guinea and the Middle East, may also seek to sell out of the pipelines connected to its $US15.7 billion PNG LNG project further down the track.

The coal seam gas to LNG ventures in Queensland included water treatment facilities and power stations that were not typically owned by oil and gas explorers and might be sold, while coal mining companies investing in new rail and port facilities might do likewise with those assets, said King & Wood Mallesons partner Craig Rogers.

"Whether it's rail, ports, water supply, pipelines, common facilities infrastructure or liquefaction trains, they are hugely expensive pieces of infrastructure," he said.

"A lot of resources companies have massive amounts of capital expenditure over the coming years to be able to meet anticipated demand and it's fair to say that many of them would prefer to deploy that capital in the most efficient way possible. That means spending on exploration and new projects and keeping the world ticking over rather than tying themselves up in existing ones."

Gas pipelines would be among prime candidates for divestment by LNG ventures in Queensland, but probably only after they were built and started up, said John Hirjee, energy analyst at Deutsche Bank. "It is important for the companies to control the pipelines because they are on the critical path," he said.

"But once it is up and running do they need to own a pipeline that will require maintenance capex and all those sorts of things? Someone with a lower cost of capital and more expertise would probably be better equipped to do that."

Stakes in gas liquefaction plants might also be sold, Mr Hirjee said.

BG is seeking bidders for a stake in its $US16 billion Queensland Curtis LNG venture, potentially in the downstream gas transportation and processing assets. The 540km pipeline is costing about $1 billion.

Oil Search managing director Peter Botten has in the past suggested Oil Search might not be a natural owner of the 700km of pipeline involved in the ExxonMobil-led PNG LNG project.

But ExxonMobil would probably retain its interest, sources say, while Japan's Inpex is understood to regard the 885km gas pipeline to be built from the Browse Basin to Darwin as an integrated part of its $US34 billion Ichthys LNG project.

Queensland pipelines are likely to attract super funds and investors happy to accept a lower return guaranteed by locked-in contracts.

APA Group, Hastings Diversified Utilities Fund, DUET and Alinta all own stakes in gas lines, as do funds such as Industry Funds Management. But HDUF chief executive Colin Atkin said assets sold off in Queensland would be unlikely to fit his investment parameters because they were being built as point-to-point lines with a sole customer and so would be likely sold at "bond-like returns".

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