Santos takes FID on Barossa gas field development

Santos Ltd., Adelaide, has taken final investment decision (FID) for the $3.6-billion development of Barossa gas-condensate field in the Timor Sea north of Darwin.

The decision also signals the start of $600 million of investment in the Darwin LNG life extension and pipeline tie-in projects that will extend the life of the infrastructure for another 20 years. The LNG plant, operated by Santos, can produce about 3.7 million tonnes/year of LNG.

Barossa field development will comprise a floating production, storage and offtake (FPSO) vessel, along with subsea production wells, subsea infrastructure, and a gas export pipeline tied into the existing Bayu-Undan-Darwin gas pipeline. Barossa is scheduled to come on stream in 2025.

Last year Santos signed a long-term LNG sales agreement with Diamond Gas International (Mitsubishi Corp.) for 1.5 million tonnes of Santos equity share LNG for 10 years with options to extend.

Santos also has signed memoranda of understanding with SK E&S and Mitsubishi to jointly investigate opportunities for carbon neutral LNG from Barossa, including collaboration relating to Santos’ Moomba carbon capture storage project, bilateral agreements for carbon credits, and potential future development of zero-emissions hydrogen.

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, which is also a partner in Barossa. Completion of the SK E&S deal is scheduled for the end of April and will result in net funds to Santos of $200 million which is the sale price of $390 million less the forecast cashflows from the 25% interests from the effective date of Oct. 1, 2019 to completion date.

Santos and JERA continue to progress the binding sales and purchase agreement for JERA to acquire a 12.5% interest in Barossa.

Completion of all sell-downs will result in Santos’ interests in Bayu-Undan and Darwin LNG changing to 43.5% and in Barossa to 50%.