Santos OKs $3.6 billion Barossa project

Australia’s Santos has taken a final investment decision for its $3.6 billion Barossa project to secure feed gas for the Darwin LNG plant in the Northern Territory.

Santos claims the project represents the biggest investment in Australia’s oil and gas sector since 2012.

Barossa FID also kick-starts the $600 million investment in the Darwin LNG life extension and pipeline tie-in projects, which will extend the facility life for around 20 years, Santos said on Tuesday.

The Santos-operated Darwin LNG plant has the capacity to produce about 3.7 million tonnes of LNG per annum.

Santos chief executive Kevin Gallagher said the decision was consistent with Santos’ strategy for disciplined growth utilising existing infrastructure around the company’s core assets.

“Our strategy to grow around our five core asset hubs has not changed since 2016. As we enter this next growth phase, we will remain disciplined in managing our major project costs, consistent with our low-cost operating model,” Gallagher said.

“As the economy re-emerges from the Covid-19 lockdowns, these job-creating and sustaining projects are critical for Australia, also unlocking new business opportunities and export income for the nation. The Barossa and Darwin life extension projects are good for the economy and good for local jobs and business opportunities in the Northern Territory,” he said.

Barossa and Darwin LNG life extension to create 600 jobs

According to Gallagher, Barossa and Darwin LNG life extension would create 600 jobs throughout the construction phase and secure 350 jobs for the next 20 years of production at the LNG facility.

Barossa FID is the final condition required for completion of the 25 percent equity sell-downs in Darwin LNG and Bayu-Undan to SK E&S, which is also a partner in Barossa.

Santos expects completion of the SK transaction at the end of April and result in net funds to Santos of about $200 million.

“I am delighted to welcome our Barossa joint venture partner SK E&S as a partner in Bayu-Undan and Darwin LNG and appreciate their support for today’s Barossa development decision,” he said.

The Barossa development will comprise a floating production, storage and offloading (FPSO) vessel, subsea production wells, supporting subsea infrastructure and a gas export pipeline tied into the existing Bayu-Undan to Darwin LNG pipeline.

To remind, Santos said last week it had awarded the FPSO contract to BW Offshore.

The firm targets first gas production in the first half of 2025.

Moreover, Santos said in December it signed a long-term supply deal with a unit of Japan’s Mitsubishi Corporation to supply LNG from its Barossa project.

Mitsubishi would buy 1.5 million tonnes per annum of Santos equity LNG but the company also executed agreements to transport and process Barossa gas through the Darwin LNG facilities.

Carbon-neutral LNG

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

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

“We will continue to explore the potential for carbon-neutral LNG from Barossa as part of our commitment to lower global emissions and as a company, reach our net-zero emissions target by 2040,” Gallagher said.

In addition, Santos and JERA continue to progress the binding sale and purchase agreement for a 12.5 percent interest in Barossa.

Completion of the sell-downs to SK E&S and JERA will see Santos’ interests in Bayu-Undan and Darwin LNG change to 43.4 percent, and in the Barossa project to 50 percent.

Most Popular

Technip Energies wins contract for Eni’s Coral Norte FLNG

France-based LNG engineering giant Technip Energies has won a contract for preliminary work on Eni's second FLNG project in Mozambique, Coral Norte (Coral North).

Victrol: LNG London hits bunkering milestone

The Shell-chartered inland bunkering vessel LNG London, owned by a joint venture of Belgium's Victrol and France's Sogestran, has reached a new operational milestone.

Himalaya’s LNG-fueled bulkers earned $34,500 per day in June

LNG-powered bulker owner Himalaya Shipping achieved average time charter equivalent earnings of about $34,500 per day in June.

More News Like This

Santos inks LNG supply deal with QatarEnergy’s trading unit

Australian LNG player Santos has signed a mid-term LNG supply deal with QatarEnergy Trading, a unit of state-owned LNG giant QatarEnergy.

Santos enters exclusive due diligence with Adnoc-led consortium

Australian LNG player Santos has entered into a process and exclusivity agreement with a consortium led by Adnoc's investment unit, XRG, related to the latter's $18.7 billion takeover offer.

Santos: Barossa project in final stages of commissioning

The Barossa gas project, which will supply feed gas to the Santos-operated Darwin LNG plant, is now in the final stages of commissioning following the arrival of the BW Opal FPSO at the Barossa gas field.

Santos gets $18.7 billion takeover offer from Adnoc-led consortium

Australian LNG player Santos has received a takeover offer valued at $18.7 billion from a consortium led by Adnoc's investment unit XRG.