Page 8 - AsiaElec Week 22

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Santos completes acquisition of ConocoPhillips’ gas assets
AUSTRALIA
AUSTRALIAN independent Santos has com- pleted its acquisition of US super-major Cono- coPhillips’ northern Australia and Timor-Leste assets for a reduced upfront price.
Santos said on May 28 that it had paid a lower upfront figure of $1.265bn in exchange for increasing a contingent payment, which is sub- ject to a final investment decision (FID) on the Barossa natural gas project offshore the North- ern Territory, to $200mn. The independent agreed to a $1.39bn upfront payment and $75mn contingent payment in October 2019.
Santos will now take over ConocoPhillips’s 56.9% stakes in the Darwin liquefied natural gas (LNG) export terminal and Bayu-Undan feed gas project, a 37.5% stake in Barossa and a 40% interest in Poseidon. Barossa is the lead candi- date to backfill Darwin LNG once Bayu-Undan, which is located 500 km north-west of Darwin in Timor-Leste waters runs dry. ConocoPhillips has projected that Bayu-Undan will enter end of life status in 2022.
Santos said its net settlement payment was $655mn, lower than a previously forecast
$800mn. The deal had an effective sale date of January 1, meaning that ConocoPhillips’ share of project profits from that point went towards lowering the final settlement amount.
Santos’ stake in Bayu-Undan and Darwin LNG climbs to 68.4% stake, while its stake in Barossa now stands at 62.5%.
Santos agreed to sell a 12.5% stake in Barossa to Japan’s JERA in April. JERA already has a 6.1% interest in the Darwin LNG terminal. The Australian developer also agreed to sell a 25% stake in Darwin LNG and Bayu-Undan to South Korea’s SK E&S for $390mn in March. The sale of the interests is subject to third-party consents, regulatory approvals and Barossa reaching FID.
Santos managing director and CEO Kevin Gallagher said: “We are continuing to advance discussions with other parties for the sale of fur- ther equity in the Barossa project in line with our previously stated target ownership level of around 40% to achieve increased partner align- ment and prudent future allocation of growth capital. We are also in discussions with buyers for Barossa LNG volumes.”™
COAL
India’s CIL sees coal sales fall
INDIA
COAL India Ltd’s (CIL) sales fell 23.3% year on year in May as power generators bought less fuel, stockpiles at power stations reached record levels and demand remained low
Offtake by customers such as power genera- tors fell to 39.95mn tonnes in May, down 23.3% y/y. May production shrank by 11.3% to 41.43 million tonnes.
The decline in sales did recover a little in May, as in April they were 25.5% year lower than in April 2019. April production was 10.9% lower than in 2019.
Power generation decreased 14.3% in May and demand for the current financial year is expected to contract for the first time in at least 36 years.
Coal accounts for over 75% of electricity generated in India, with CIL – the world’s largest coal miner – accounting for more than 80% of India’s domestic output.
India has also ramped up electricity genera- tion from non-fossil fuel sources at the expense of coal-fired generation over the past two months, further dampening coal demand.
State-run CIL has been pushing electricity generators to keep buying coal even though
utilities’ stocks and miners’ inventories are at record highs.
Meanwhile, CIL is aiming to replace 100mn tonnes of the country’s coal imports with domes- tic production in the 2020-21 fiscal year, rising to 150mn tonnes in the following year, in a bid to compensate for lower sales since the coronavirus (COVID-19) lockdown began.
India imported 249mn tonnes of coal in 2019-20.
The news comes as the country’s strict lock- down comes into effect, although the crisis is expected to have a deep and damaging effect on the country’s industrial activity, and therefore demand for electricity and coal.
For CIL, it faces finding new customers, partly by replacing imports, as it still must aim to meet increase output to 710mn tonnes in 2020- 21, up from 602.1mn tonnes in 2019-20.
Power utilities, a key market for CIL, imported 69.2mn tonnes in 2019-20, a 12.2% y/y increase. Even power plants designed to run on domestic coal imported 23.8mn tonnes of coal, according to India’s Central Electricity Authority.™
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w w w . N E W S B A S E . c o m Week 22 03•June•2020