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Santos nears Barossa LNG investment decision


Santos is set to make a final investment decision (FID) on the Barossa LNG project offshore northern Australia by the end of the year.

In a September quarter update, reported that the Barossa project was well progressed on value engineering that is targeting reduced project capital and operating costs.

The Barossa JV, which includes JERA and SK E&S, is also finalising the processing agreement for gas from the project, with Santos in advanced discussions for an LNG offtake.

Santos’ decision remains subject to business conditions, joint venture agreements and relevant approvals.

Elsewhere, Santos is progressing other growth projects, including pre-FEED work on the Dorado oil project in Western Australia.

Santos is also seeking federal approval for the Narrabri gas project in New South Wales under the EPBC Act, with a decision expected by year-end.

Narrabri was approved by the NSW Independent Planning Commission in the September quarter.

During the quarter, Santos’ oil and gas production was 22 per cent higher than the previous quarter, primarily due to increased equity in Bayu-Undan following the completion of its acquisition of assets from ConocoPhillips.

The company also recorded higher domestic gas production in Western Australia due to a full quarter of its new Alcoa fixed-price domestic gas contract for 120 TJ a day.

Santos managing director and chief executive Kevin Gallagher said the company’s disciplined, low-cost operating model continued to drive strong performance across its diversified asset portfolio.

“The operating model combined with our portfolio of fixed-price domestic gas contracts, enabled us to deliver higher quarterly revenues and consistent free cash flow generation despite the impact of significantly lower oil price-linked contracted LNG prices,” Gallagher said.

“We expect the third quarter to represent the trough for LNG prices, with higher prices expected in the fourth quarter based on current JCC oil-linked and JKM spot pricing, with JKM currently above $US6/mmBtu ($8.41) for December delivery.”

Gallagher said Santos’ production levels were expected to remain “relatively stable” for the next five to six years, allowing it to continue to progress its major capital projects.