WORLEY LIMITED — Capital/Financing Update 2008

Jan 14, 2008

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January 15, 2008

LNG Ltd Has Access Approval At Gladstone LNG – Fisherman’s Landing Project Site

• Project On Budget, On Schedule

• WorleyParsons, Arup Appointed As Engineering Advisers

• Project Capital Cost Confirmed At US$400 Million

• Advanced Talks Underway With Potential LNG Buyers

PERTH: Liquefied Natural Gas Limited. (ASX:LNG) today said it has achieved further substantial progress at the Gladstone LNG Project–Fisherman’s Landing project site in Queensland, with preparatory work set to begin at the site and two major firms appointed to assist in the engineering design phase.

LNG Managing Director Maurice Brand said that among the most significant measures, the Central Queensland Port Authority (CQPA) has granted the company conditional access to the Fisherman’s Landing site that will allow preparation of an Environmental Impact Statement.

Mr Brand said “the company will commence activities at Fisherman’s Landing on January 21, 2008, consisting of investigation work on the 25 hectares of reclaimed land to enable foundation design parameters to be completed. This will be followed by ground improvement work to prepare the LNG tank and plant foundations”.

“We welcome the decision by CQPA to approve early access to the site and this will have a positive impact on the overall project construction schedule. The company is confident that a lease agreement with CQPA can be completed in a timely manner,” Mr Brand said.

“With these and other milestone announcements, we can confirm that the Gladstone LNG Project-Fisherman’s Landing remains on budget and on schedule, with financial close still targeted for late 2008 and the first LNG shipment scheduled for January 2011,” he said.

Other key project announcements include:

• WorleyParsons and Arup appointed to assist with the Front End Engineering Design (FEED) phase

• Project capital cost estimate remains on budget at US$400 million, based on 1.3 million tonnes per annum LNG production capacity

• Advanced discussions underway with shortlisted LNG buyers for 20 cargoes per year from January 2011

• Successful LNG buyer should be capable of purchasing a further 20 cargoes from a second 1.3mtpa train planned in 2012/13

• Expect to finalise Gas Sales Agreement with Arrow Energy NL in first quarter 2008

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• LNG to have 60% stake in Gladstone LNG Project-Fisherman’s Landing through special purpose company Gladstone LNG Pty Ltd

• Arrow Energy has option on 20% stake and LNG buyer also expected to acquire 20% stake

• Several Australian and international banks express interest in project financing role, formal selection process to be undertaken later

Environmental Impact

Mr Brand said “the company has lodged a referral application with the Australian Government’s Department of the Environment, Water, Heritage and the Arts for consideration under the Environmental Protection and Biodiversity Conservation Act. It has also lodged an application to voluntarily prepare an EIS, including draft Terms of Reference and Initial Advice Statement, with the Environmental Protection Authority ( EPA ) of Queensland”.

“The EPA process is well established and, based on lengthy consultation with the EPA, the company and its consultant WorleyParsons believe that relevant approvals should be received in a timely manner and in compliance with the overall project schedule,” Mr Brand said.

Project Development, Engineering Design

WorleyParsons will assist the company with Front End Engineering and Design (FEED) of the LNG plant, including selection of suppliers for the 10 major process equipment/package items and will also assist in selection of the LNG plant construction contractor. This information will then form a key component of the detailed (bankable) feasibility study.

Mr Brand said “Arup will assist the company with FEED, including selection of the principal contractor to undertake the LNG tank construction and all site civil engineering activities. This will also form a key component of the feasibility study”.

Capital Cost of Equipment and Contractors Costs

The company has nominated potential suppliers of all major equipment/package items. Proposals received to date are within budget estimates and required delivery schedule.

Construction contractor(s) have been identified and discussions are well advanced with a view to early selection and appointment.

Capital cost estimates, for the first train of 1.3 million tonnes per annum LNG production capacity, remain on budget at US$400 million.

Selection of LNG Buyers

The company has received strong expressions of interest from numerous existing LNG buyers to secure access to the 20 LNG cargoes per year, commencing January 2011, from the first train of 1.3 million tonnes.

The company is in advanced discussions with several shortlisted LNG buyers, including their potential investment in the Gladstone LNG Project-Fisherman’s Landing. All shortlisted LNG buyers are of a high credit standing, have existing LNG purchasing and trading activities and access to LNG ships.

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It is also the company’s preference that the selected LNG buyer be capable, subject to additional gas supply from Arrow Energy NL, of purchasing a further 20 cargoes from a second train of 1.3 million tonnes per annum LNG production capacity, planned in 2012/13.

Shareholders will be advised of the appointed LNG buyer following completion of the final selection process.

Gas Sales Agreement

The company and Arrow Energy NL, gas supplier to the project, have now commenced preparation and negotiation of the Gas Sales Agreement ( GSA ), based on the Key Commercial Terms agreed and documented with Arrow Energy NL in October last year. It is the intention of the parties to finalise the GSA in the first quarter 2008.

Arrow Energy NL has an active drilling program in progress to add to existing gas reserves and during 2008 will update the proven and probable reserves (2P) that will be dedicated for supply to the Gladstone LNG Project-Fisherman’s Landing.

Completion of the GSA and updating of dedicated 2P gas reserves are key components of the detailed (bankable) feasibility study and the targeted financial close in late 2008.

Project Financing

As previously advised, the company plans to finance the Gladstone LNG ProjectFisherman’s Landing through a prudent combination of equity and limited, or non-recourse, project debt. The company has incorporated a special purpose “project” company, Gladstone LNG Pty Ltd, to undertake the development of the Gladstone LNG Project-Fisherman’s Landing, including the raising of the project financing.

In relation to equity funding, Arrow Energy NL has an option, exercisable within 90 days of signing of the GSA, to acquire 20% equity in Gladstone LNG Pty Ltd, at cost, and it is expected the selected LNG buyer will also acquire a 20% equity interest. It is proposed that the company will retain an interest of 60% in Gladstone LNG Pty Ltd.

The company has received preliminary “project financing” expressions of interest from several Australian and international banks and, subsequent to the further progression of some key components of the detailed (bankable) feasibility study, the company will consider the implementation of a formal selection process for the appointment of the Gladstone LNG Project-Fisherman’s Landing “Financial Advisor and Lead Debt Arranger”.

For further information please contact:

Maurice Brand Managing Director & Chief Executive Officer Telephone: 08 9366 3700/0417194678

Norman Marshall Director & Chief Financial Officer Telephone: 08 9366 3700/0418924329

Ian Pemberton P&L Corporate Communications Telephone: 02 9241 6044 / 0402 256 576

Liquefied Natural Gas Limited Ground Floor, 5 Ord Street, West Perth WA 6005 Telephone: (08) 9366 3700 Facsimile: (08) 9366 3799 Email: LNG@LNGlimited.com.au; Website: www.LNGlimited.com.au

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Site Location Map for Gladstone LNG Project – Fisherman’s Landing

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Fisherman's Landing site, with Wharf No. 5 in the foreground

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