$4.7B NT gas project decision in weeks: Santos awards biggest contract for project

A FINAL investment decision on Santos’ $4.7 billion Barossa project to supply replacement gas for the Darwin LNG plant, is anticipated in the coming weeks with the company awarding the biggest contract for the project

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A FINAL investment decision on Santos’ $4.7 billion Barossa project to supply replacement gas for the Darwin LNG plant, is anticipated in the coming weeks with the company awarding the biggest contract for the project.

The final go ahead will see first gas targeted for the first half of 2025.

International ship builder and operator BW Offshore construct, connect and operate the project’s Floating Production, Storage and Offloading vessel (FPSO).

An LNG tanker in Darwin.

While the contract remains subject to a final investment decision on the project the gas infill project 300km off the coast of Darwin, has been gathering pace with Santos’ recently announcing its $300 million Bayu-Undan infill drilling program Final Investment Decision.

The infill drill program comprises three production wells (two platform and one subsea) and will extend field life as well as production from the offshore facilities and the Darwin LNG plant.

Santos said $300m infill program extends the life of the Bayu-Undan field and mean more jobs and investment for Territorians and reduces the period of time the Darwin LNG facility is offline before the $5 billion Barossa project comes on stream.

Today’s FPSO contract contains an upfront prepayment and an option to buyout, and achieves an overall reduction of approximately $1.7 billion in capital expenditure.

The FPSO will be built in South Korea and Singapore before being towed and permanently located in the field where it will process natural gas prior to its transport via pipeline to Darwin LNG.

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Santos managing director and chief executive officer Kevin Gallagher said the awarding of the contract builds on the momentum of the Barossa project over the past six months and is the final milestone ahead of FID.

“At the end of last year, we announced that transport and processing agreements had been finalised for Barossa gas to be tolled through Darwin LNG and we signed a long-term LNG sales agreement with Diamond Gas International, a wholly-owned subsidiary of Japan’s Mitsubishi Corporation,” Mr Gallagher said.

“The decision to proceed with an FPSO services contract maintains a low ongoing operating cost while engineering enhancements have significantly reduced the project’s carbon footprint.

“This reduction in capital expenditure makes Barossa one of the lowest cost of supply projects in the world for LNG and will provide new supply into a tightening LNG market.”

Barossa will provide the next source of gas for the Santos-operated Darwin LNG plant once current reserves from the Santos-operated Bayu-Undan field in the Timor Sea have been depleted.

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Santos currently holds a 62.5 per cent operated interest in the Barossa joint venture along with partner SK E & S (37.5 per cent).

Santos is finalising an agreement to sell a 12.5 per cent interest in Barossa to Darwin LNG partner JERA and has a binding agreement to sell 25 per cent interests in Bayu-Undan and Darwin LNG to SK E & S, subject to FID on Barossa.