Australian oil and gas firm Santos has taken the final investment decision (FID) for the Barossa joint venture and will now proceed with the US$3.6Bn gas and condensate project
The Barossa FID will kick-start the US$600M investment in the Darwin LNG extension and pipeline tie-in projects, which will extend the facility life for around 20 years.
Barossa – one of the lowest cost, new LNG supply projects in the world – is expected to give Santos and Darwin LNG a competitive advantage in a tightening global LNG market. The project represents the biggest investment in Australia’s oil and gas sector since 2012.
Santos managing director and chief executive Kevin Gallagher said FID on Barossa was consistent with the company’s strategy for disciplined growth utilising existing infrastructure around the company’s core assets.
In January, Santos extended the life of its Bayu-Undan operation, after approving a US$235M Phase 3C infill drilling programme.
“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,” Mr Gallagher said, adding “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.”
The Barossa field will be developed using a floating production storage and offloading (FPSO) vessel in the Timor Sea and includes subsea production wells, supporting subsea infrastructure and a gas export pipeline tied into the existing Bayu-Undan to Darwin LNG pipeline.
At the end of 2020, Santos announced the tolling arrangements had been finalised for Barossa gas to be processed through Darwin LNG and signed a long-term LNG sales agreement with Diamond Gas International, a subsidiary of Mitsubishi Corporation, for 1.5M tonnes of Santos-equity LNG for 10 years with extension options.
Santos has also signed memoranda of understanding with SK E&S and Mitsubishi to jointly investigate opportunities for carbon-neutral LNG from Barossa, including collaboration relating to the company’s Moomba CCS project, bilateral agreements for carbon credits and potential future development of zero-emissions hydrogen.
The Barossa FID is the final condition required for completion of the 25% equity sell-downs in Darwin LNG and Bayu-Undan to SK E&S, while Japanese joint venture JERA will acquire a 12.5% interest in the Barossa project.
Completion will see Santos’ interests in Bayu-Undan and Darwin LNG change to 43.4 %, and in the Barossa project to 50%.
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