Name of the Project
Barossa project to backfill Darwin liquefied natural gas (DLNG) plant.

Location
The project is located 300 km north of Darwin, within Santos’ Northern Australia portfolio, one of the company’s core long-life, natural gas assets.

The project area encompasses petroleum permit NT/RL5 over the Barossa field and petroleum permit NT/RL6 to the south over the Caldita field to be developed as a potential future phase of the project.

Project Owner/s
Santos currently holds a 62.5% operating interest in the Barossa joint venture (JV), along with partner SK E&S (37.5%). Santos is also a JV partner and operator in DLNG, with a 68.4% interest.

Project Description
The Barossa development comprises a floating production storage and offloading facility (FPSO), with six subsea production wells to be drilled in the initial phase, and supporting in-field subsea infrastructure and a gas export pipeline tied into the existing pipeline between Bayu-Undan and Darwin.

The project aims to provide gas for the DLNG plant after the Bayu-Undan reservoir ceases production after 2022.

Barossa’s development will extend the operating life of the DLNG plant by more than 20 years.

Potential Job Creation
Not stated.

Capital Expenditure
Not stated.

Planned Start/End Date
A final investment decision is expected towards the end of 2019.

Latest Developments
Santos has signed a binding long-term LNG supply and purchase agreement with Diamond Gas International (DGI), a wholly owned subsidiary of Mitsubishi Corporation (Mitsubishi), for the supply of LNG from the Barossa project.

The long-term supply and purchase agreement is a contractual commitment for the supply and acquisition of 1.5-million tonnes a year of Santos equity LNG from Barossa for ten years with extension options, at a price based on the Platts Japan Korea Marker. Santos also has options to pursue further LNG transactions through commercial flexibilities negotiated with DGI.

The agreement with DGI is another significant step towards a final investment decision on Barossa, which is targeted for the first half of 2021.

“The SPA delivers a firm LNG offtake arrangement, which represents over 80% of Santos’ equity LNG volume from the Barossa project at our expected 50% interest level following the previously announced sell-down to JERA, while the Platts Japan Korea Marker-indexation provides portfolio balance for our existing oil-linked LNG offtake agreements from GLNG and PNG LNG.

“It also represents the first Santos long-term equity LNG sale from one of our major LNG projects, demonstrating our marketing capability to meet customer needs in the market,” Santos MD and CEO Kevin Gallagher has said.

In addition to the long-term supply and purchase agreement, Santos Mitsubishi has signed a memorandum of understanding to jointly investigate opportunities for carbon-neutral LNG from Barossa.

These include collaborating on opportunities pertaining to Santos’ Moomba carbon capture and storage project, the pursuit of carbon-neutral LNG, bilateral agreements for carbon credits and potential future development of zero-emissions hydrogen.

Santos’ Moomba capture and storage project is final investment decision-ready and will have the capacity to safely and permanently store 1.7-million tonnes a year of carbon dioxide deep underground in depleted natural gas reservoirs, subject to government approval regarding eligibility for Australian Carbon Credit Units.

Completion of the planned sell-downs to SK E&S and JERA, announced in early 2020, will result in Santos’ interests in DLNG and the Barossa project change to 43.4% and 50% respectively. The sell-downs are subject to customary consents, regulatory approvals and final investment decision on Barossa.

Key Contracts, Suppliers and Consultants
MODEC and a consortium between TechnipFMC and Samsung Heavy Industries (FPSO) and INTECSEA (subsea infrastructure); Allseas Group (engineering, procurement, construction and installation of the gas export pipeline).

Contact Details for Project Information
Santos media enquiries Joanna Vaughan, tel +61 2 9276 1134 or email joanna.vaughan@santos.com; or investor enquiries Andrew Nairn, tel +61 8 8116 5314 or email andrew.nairn@santos.com.