Page 13 - AsianOil Week 11

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all non-essential projects and has deferred planned exploration work.
Commenting on the planned $13bn expansion of ExxonMobil’s PNG LNG facil- ity, which is being spearheaded by both ExxonMobil and Total, Oil Search said: “At present, we have assumed that activities on LNG expansion are minimal.”
The expansion had already run into trouble in late January, when the government walked away from talks with ExxonMobil on the P’nyang gas field, which is a key pillar of the development. Under the proposed expansion, one train will use gas from the P’nyang and PNG LNG fields as feedstock, while two trains will use gas from the Total-led Papua LNG project.
Energy consultancy Rystad Energy said earlier this month that the breakdown in
talks would likely delay first production from Papua LNG to 2026 and the PNG LNG expansion to 2029. Oil Search noted this week that ExxonMobil had said it also intended to slash discretionary spending.
Oil Search said it had also suspended early development work at its Pikka project in Alaska and that it would not carry out any further exploration there. The company has also suspended plans to divest a 15% stake in its Alaskan assets.
Commenting on the company’s budget cuts, Oil Search managing director Keiran Wulff said: “While Oil Search is fortunate to have world- class assets, these unprecedented times require us to take immediate and decisive steps to posi- tion us for a potentially extended period of lower oil prices and business uncertainty.”™
Santos agrees to Darwin LNG, Bayu-Undan stake sale
FINANCE & INVESTMENT
AUSTRALIAN developer Santos has agreed to sell down its stake in the Darwin liquefied nat- ural gas (LNG) terminal and the Bayu-Undan gas field once its acquisition of ConocoPhillips’ northern Australian gas assets has been finalised.
Santos said on March 12 that it had agreed to sell a 25% stake in both projects to South Korea’s SK E&S for $390mn, with the deal being back- dated to October 1, 2019.
The Australian independent agreed in Octo- ber 2019 to buy US super-major ConocoPhil- lips’ operated interests in Darwin LNG and Bayu-Undan as well as the Barossa and Posei- don offshore natural gas projects. Santos said at the time that it had agreed to pay $1.39bn for the assets as well as a $75mn contingent payment subject to a final investment decision (FID) on the Barossa development.
ConocoPhillips owns a 56.9% stake in Dar- win LNG and Bayu-Undan as well as 37.5% of the Barossa development. The US super-major also operates the Poseidon exploration project with a 40% stake.
Because the deal with ConocoPhillips carries an effective sale date of January 1, 2019 and the deal with SK E&S has been backdated to Octo- ber 1, 2019, Santos expects to receive around $120mn in cash flow during its nine-month ownership of the 25% stakes in Darwin LNG and Bayu-Undan.
Santos said its agreement with the South Korean company hinged up the successful
completion of the ConocoPhillips deal as well as third-party consents, regulatory approvals and the Barossa FID.
Santos, which already owns an 11.5% stake in Darwin LNG and Bayu-Undan as well as 25% in Barossa, is eager to reduce its anticipated posi- tion within the latter project.
Santos MD and CEO Kevin Gallagher said: “Santos continues to build alignment between the Darwin LNG and Barossa joint ventures through discussions with Darwin LNG participants and others to acquire equity in Barossa. We are in advanced dis- cussions to sell down equity in Barossa to a target ownership of around 40% to achieve increased partner alignment.”™
Image: ConocoPhillips
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