Page 11 - AsianOil Week 41

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EAST ASIA AsianOil
Yantai Port reach an agreement with Pet- roChina at the start of the year to invest $1bn in building an LNG terminal with four 200,000 cubic metre tanks and a berth capable of receiv- ing similarly sized LNG carriers.
To better manage national gas invento- ries in the face of seasonal demand peaks and troughs, the country has been building out its gas storage capabilities. Retailer Towngas is the latest player to unveil investment plans for such infrastructure.
Storage plans
The Hong Kong-listed distributor intends to build 25 underground storage facilities in Jiangsu Province with 1.1 bcm of capacity by
2026, Reuters quoted senior vice-president Zhu Jianying as saying this week.
Towngas will build 10 facilities with 453mn cubic metres of capacity by 2023, before adding another 15 facilities with 701 mcm of capacity by 2026. The storage sites will link to pipelines belonging to state-run PetroChina and Sinopec. The executive added that his company intended to expand its existing 89 mcm storage facility, which came online in October 2018, to 160 mcm by this winter.
Zhu told the newswire that Towngas would use LNG imports to supplement its gas storage and had invested in berths in southern and east- ern China. It expects to increase its gas sales from 22.5 bcm in 2019 to 26 bcm this year.™
OCEANIA
Santos buys ConocoPhillips’ gas assets in northern Australia
FINANCE & INVESTMENT
AUSTRALIAN independent Santos has bought US super-major ConocoPhillips’ operated interests in the Darwin LNG project as well as the Bayu-Undan, Barossa and Poseidon offshore natural gas projects.
Santos said on October 14 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. It described the field as the lead candidate to back- fill the 3.7mn tonne per year (tpy) Darwin LNG terminal once Bayu-Undan runs dry.
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.
Santos noted that Bayu-Undan had a gas pro- duction capacity of 600mn cubic feet (16.99mn cubic metres) per day, while Barossa had a gross 2C resource of 799mn barrels of oil equivalent (boe). ConocoPhillips has previously projected that Bayu-Undan will enter end of life status in 2022.
Santos already has an 11.5% stake in Darwin LNG and Bayu-Undan as well as 25% in Barossa. Once the deal has closed, which is still subject to third-party and regulatory approvals, Santos hopes to sell a 25% interest in Darwin LNG and Bayu-Undan to South Korea’s SK E&S. The two have already signed a letter of intent (LoI) to that effect. SK E&S owns 37.5% of Barossa.
Santos managing director and CEO Kevin Gallagher said reducing its stake in Darwin LNG
and Barossa to 40-50% would create “alignment between joint venture participants” while optimis- ing equity levels in its Western Australia assets.
Gallagher added: “Santos will target the con- tracting of around 60-80% of LNG volumes for 10 plus years prior to taking FID on Barossa, which is expected by early 2020. Discussions to date have demonstrated strong interest in Barossa LNG, given it is a brownfield upstream development located close to North Asian demand.”
The executive added that approvals were already in place to expand Darwin LNG to 10mn tpy.
Santos noted that the deal had an effective sale date of January 1, which means it will receive ConocoPhillips’s share of profits from the projects from that point. These proceeds, coupled with the planned asset sale to SK E&S, should reduce the acquisition’s final cost to $775-825mn. Santos said it would fund this from current cash resources and a new two-year $750mn credit line.™
Week 41 16•October•2019 w w w . N E W S B A S E . c o m P11