Santos secures FID on the Barossa Gas Project for Darwin LNG

Santos, as operator of the Barossa joint venture, announced that a final investment decision (FID) has been taken to proceed with the US$3.6 billion gas and condensate project, located offshore the Northern Territory.

Barossa FID also kick-starts the US$600 million investment in the Darwin LNG life extension and pipeline tie-in projects, which will extend the facility life for around 20 years. The Santos-operated Darwin LNG plant has the capacity to produce approximately 3.7 million tonnes of LNG per annum. 

At the end of last year, Santos announced the tolling arrangements had been finalized for Barossa gas to be processed through Darwin LNG and that Santos had signed a long-term LNG sales agreement with Diamond Gas International, a wholly-owned subsidiary of Mitsubishi Corporation, for 1.5 million 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 Santos’ Moomba CCS project, bilateral agreements for carbon credits, and potential future development of zero-emission hydrogen.

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. Completion of the SK transaction is expected to occur at the end of April and result in net funds to Santos of approximately US$200 million, being the sale price of US$390 million less the forecast cashflows from the 25 percent interests from the effective date of 1 October 2019 to completion.

Santos and JERA continue to progress the binding sale and purchase agreement for JERA to acquire 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.