Page 12 - GLNG Week 15
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GLNG AUSTRALASIA GLNG
Santos agrees to Barossa stake sale with JERA
INVESTMENT
Barossa will be developed to backfill the Darwin LNG terminal.
AUSTRALIAN developer Santos has agreed to sell a 12.5% stake in the Barossa natural gas project offshore the Northern Territory to Japan’s JERA.
Santos said on April 16 that the two compa- nies had signed a letter of intent (LoI), adding that the agreement advanced Barossa’s develop- ment as backfill for Darwin LNG. JERA already has a 6.1% interest in the gas export terminal. The value of the deal was not disclosed.
Santos’ managing director and CEO, Kevin Gallagher, said: “Santos continues to build align- ment between the Darwin LNG and Barossa joint ventures. Following completion of the ConocoPhillips acquisition and the sell-downs to JERA and SK E&S, Santos will hold a 43.4% interest in Darwin LNG and a 50% interest in Barossa.”
The independent agreed in October 2019 to buy ConocoPhillips’ operated interests in Dar- win LNG, the Bayu-Undan gas field as well as the Barossa and Poseidon offshore gas projects. Santos said at the time that it had agreed to pay $1.39bn for the assets as well as a $75mn contin- gent payment subject to a final investment deci- sion (FID) on Barossa.
ConocoPhillips owns a 56.9% stake in Dar- win LNG and Bayu-Undan, 37.5% of Barossa and operates the Poseidon exploration project with a 40% stake.
Santos said on March 12 that it had agreed to sell a 25% stake in Darwin LNG and Bayu-Un- dan to South Korea’s SK E&S for $390mn.
Gallagher said: “We are continuing to advance discussions with other parties for the sale of further equity in the Barossa project in line with our previously stated target ownership level of around 40% to achieve increased part- ner alignment and prudent future allocation of growth capital. We are also in discussions with buyers for Barossa volumes.”
While Gallagher said Barossa was important project for Santos, he still expected to defer FID owing to “the uncertain economic impact of [coronavirus] COVID-19 combined with lower oil prices”.
Santos said its deal with JERA was subject to the finalisation of a binding sale and pur- chase agreement (SPA), the completion of its acquisition of the ConocoPhillips assets, third-party consents, regulatory approvals and an FID on Barossa.
EUROPE
Novatek overseas sales slump in Q1
PERFORMANCE
The bulk of Novatek’s overseas gas sales come from the Yamal LNG project in the Russian Arctic.
RUSSIA’S biggest independent gas producer Novatek saw a sharp dip in international sales in the first quarter, the company reported on April 9.
The vast bulk of Novatek’s overseas gas sales come from the Yamal LNG project in the Rus- sian Arctic, where the firm is partnered with France’s Total and China’s CNPC and Silk Road Fund. Its international gas shipments slumped 28.4% year on year in the three months ending March 31, to 2.45bn cubic metres.
Novatek attributed the decline to the fact that more of Yamal LNG’s gas was sold under long- term supply contracts during the period versus a year earlier, at the expense of spot market sales.
Yamal LNG came on stream in late 2017 and it reached its full 16.5mn tonne per year (tpy) capacity within a year, ahead of schedule. The faster ramp-up at the plant meant that more gas was sold on a spot basis initially, as long- term contracts had yet to kick in. Most of its gas is contracted for delivery to China and other
Asia-Pacific markets.
China has declared forces majeure on a num-
ber of its gas import contracts this year, citing the impact of the coronavirus COVID-19 pan- demic. But neither Novatek nor its Chinese part- ners have confirmed a disruption in Yamal LNG shipments.
Novatek’s domestic gas sales totalled 18.24 bcm in 2019, representing a 2.9% drop y/y. This brought overall sales to 20.7 bcm, down 6.8% compared with 2018.
Despite weaker sales, Novatek’s gas produc- tion grew by 2.2% y/y to 19.1 bcm in the quarter. Its liquids output was up 2% at 3.05mn tonnes. The company had 0.3 bcm of gas and 620,00 tonnes of gas condensate and petroleum prod- ucts either in storage or transit at the end of March, it said, recognising these volumes as its inventory.
The company has said that despite the market downturn, the projects it is currently developing in the Arctic will proceed as planned.
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w w w . N E W S B A S E . c o m Week 15 17•April•2020
