Santos wraps up Darwin LNG sell-down to SK

Australia’s Santos said it had completed the sell-down of 25 percent interests in the Darwin LNG facility and Bayu-Undan field to South Korea’s SK E&S.

Bayu-Undan is a gas field located offshore Timor-Leste which supplies the Darwin LNG facility at Wickham Point in Australia’s Northern Territory. The Santos-operated LNG plant has the capacity to produce about 3.7 million tonnes of LNG per annum.

According to Santos, the sell-down resulted in net funds to the firm of $186 million at completion, being the sale price of $390 million less the cashflows from the 25 percent interests from the effective date of October 1, 2019 to completion.

Santos chief executive officer Kevin Gallagher welcomed Barossa joint venture partner SK E&S as a partner in Bayu-Undan and Darwin LNG.

“The sell-down to SK E&S is in-line with our strategy of disciplined growth while maintaining a strong balance sheet by managing equity levels in our growth projects consistent with disciplined capital management,” Gallagher said.

Carbon-neutral LNG and hydrogen

Santos and SK E&S have also signed a memorandum of understanding to jointly investigate opportunities for carbon-neutral LNG from Barossa.

This includes collaboration relating to Santos’ Moomba CCS project, bilateral arrangements for carbon credits and potential future development of “zero-emissions” hydrogen.

Furthermore, completion of the sell-down to SK E&S sees Santos’ interest in Bayu-Undan and Darwin LNG change to 43.4 percent, and Santos remains operator of both assets.

The remaining interests are held by SK E&S (25 percent), INPEX (11.4 percent), Eni (11 percent), JERA (6.1 percent) but also Tokyo Gas (3.1 percent).

To remind, operator Santos has recently announced the final investment decision on the $3.6 billion Barossa gas project offshore northern Australia.

Santos expects first gas from Barossa to backfill Darwin LNG in the first half of 2025.

Moreover, the firm and Japan’s JERA continue to progress the binding sale and purchase agreement for the latter to acquire a 12.5 percent interest in Barossa, it added.

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