$19bn PNG project gives Santos’ June quarter a boost

18th July 2014 By: Esmarie Iannucci - Creamer Media Senior Deputy Editor: Australasia

$19bn PNG project gives Santos’ June quarter a boost

Photo by: Bloomberg

PERTH (miningweekly.com) – Oil and gas major Santos has reported a 5% increase in production for the second quarter ended June on the back of the successful start-up of its Papua New Guinea liquefied natural gas (PNG LNG) project in April this year.

During the three months to June, Santos’ production rose to 12.8-million barrels of oil equivalent, up 5% on the previous quarter and up 3% on the previous corresponding quarter.

Sales revenue for the quarter was also up 22% on the previous quarter to A$974-million, while sales revenue for the interim period to June increased by 25% on the previous comparative period to A$1.887-billion.

Santos MD and CEO David Knox noted that the successful start-up of the PNG LNG project, which shipped seven LNG cargoes by the end of the quarter, had driven the sound second-quarter results and had built momentum for a stronger second half.

“Delivery of the PNG LNG project is an important milestone for Santos in our journey to becoming a major LNG supplier to Asia. This project will significantly lift Santos’ LNG production once the project reaches full output, and we are already seeing the contribution this is making.”

The $19-billion PNG LNG project is an integrated development that includes gas production and processing facilities in the Southern Highlands, Hela, Western, Gulf and Central provinces of Papua New Guinea.

More than 700 km of pipeline connect the facilities, which include a gas conditioning plant in Hides and liquefaction and storage facilities near Port Moresby with capacity of 6.9-million tonnes a year.

Meanwhile, Knox pointed out that the Gladstone LNG project had also celebrated a number of construction milestones during the quarter, including the handover for commissioning of the first upstream gas hub, the completion of the final weld on the gas transmission pipeline, the placement of the final train 1 module and the completion of hydro-testing of the first LNG tank.

The $18.5-billion Gladstone LNG project, which is 30% held by Santos, will deliver some 7.8-million tons a year of gas.

“Gladstone LNG continues to make good progress, it remains on budget and we are on track to deliver first LNG in 2015,” Knox said.

For the full year, Santos expected to produce between 52-million and 57-million barrels of oil equivalent.