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Santos agrees to Barossa stake sale with JERA
AUSTRALIA
AUSTRALIAN developer Santos has agreed to sell a 12.5% stake in the Barossa natural gas pro- ject 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 Darwin 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 contingent payment subject to a final investment decision (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 purchase agreement (SPA), the completion of its acqui- sition of the ConocoPhillips assets, third-party consents, regulatory approvals and an FID on Barossa.™
Shell, GCL consider Chinese LNG venture
CHINA
PRIVATELY owned Chinese company GCL Oil & Natural Gas has signed a framework agree- ment with super-major Royal Dutch Shell to explore a potential joint venture to market and trade LNG.
According to an announcement from GCL, the proposed joint venture would be based in eastern China. It would involve LNG supplies secured from Shell and marketed to a receiving terminal that GCL is planning to build in Jiangsu Province.
Reuters reported this week that a Shell spokeswoman had confirmed the agreement, but added that no further details had so far been provided by either of the companies involved.
However, a GCL strategic planning official, Huang Shaohua, told Reuters that the company was intending to develop three receiving termi- nals along China’s east coast – Yantai in Shan- dong Province, Rudong in Jiangsu and Maoming in Guangdong. The three terminals will have a combined handling capacity of 14.5mn tonnes
per year (tpy).
Yantai LNG was reported in March to have
received regulatory approval earlier this year (See GLNG Week 11). Huang said GCL was aim- ing to begin construction on the 5mn tpy facility later this year. Yantai is estimated to cost $1.1bn to build, and is due to enter service in 2023.
According to Huang, GCL submitted an investment plan for the 6.5mn tpy Rudong ter- minal to the state authority in December 2019.
He also said the company was in discussions with state-owned PetroChina over the possibil- ity of joint investment in the 3mn tpy Maoming project.
GCL is a subsidiary of private energy and power firm GCL (Group) Holding. It is one of a handful of privately owned Chinese companies that are moving into LNG infrastructure devel- opment. So far the country’s LNG industry has been dominated by the three leading stateowned firms – China National Offshore Oil Corp. (CNOOC), PetroChina and Sinopec.™
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