Page 15 - GLNG Week 21
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GLNG AUSTRALASIA GLNG
Santos completes acquisition of ConocoPhillips’ gas assets
AUSTRALASIA
Barossa is the lead candidate to backfill Darwin LNG once Bayu-Undan runs dry.
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.”
EUROPE
Ukraine signs deal to buy US LNG
POLICY
UKRAINE’S government has approved a mem- orandum with a US firm called Louisiana Natu- ral Gas Exports on the potential delivery of 5.5bn cubic metres of US LNG, it said on May 27.
The amount would cover more than half of Ukraine’s annual gas imports, which reached 10.6 bcm in 2019.
Ukraine is striving to become independent in gas, having awarded dozens of contracts to investors over the past year to develop its domes- tic resources. For the time being, though, it sup- plements domestic supply with imports from its EU neighbours Hungary, Poland and Slovakia. It stopped buying gas from its former main sup- plier Russia in 2015, after relations between the two neighbours broke down.
In the past year Ukraine has reached out to US gas suppliers, buying gas imported at the Swinoujscie LNG regasification terminal in northern Poland.
“The memorandum provides for the study of the possibility of diversification of natural gas supply sources by ensuring the long-term supply of LNG and the development of cross-border gas infrastructure,” Ukrainian Energy Minister Olga
Buslavets said in a message on the government’s website.
The Swinoujscie terminal is undergoing an EU-funded expansion that will raise its import capacity by 50% by 2024. Poland wants to posi- tion itself as a hub for regional gas trade, with several other import projects also underway, including new pipelines from Norway and Lith- uania and potentially a second LNG terminal in Gdansk.
This infrastructure will allow Poland to achieve its stated aim of ending its reliance on Russian gas after its long-term contract with Gazprom expires in 2022. But if all these projects are realised it should also have some supplies spare for Ukraine. The two countries aim to fin- ish a new gas link to increase cross-border flows.
Ukrainian officials say that under the mem- orandum, the price that Ukraine pays for US LNG would be pegged to prices at Louisiana’s Henry Hub. Louisiana Natural Gas Exports does not have a website, but is registered with the US Security and Exchange Commission (SEC) and incorporated in the state of Delaware, according to US records.
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