RE: AFR Santos - Beetaloo related15 Oct 2019 21:34
Northern gas shake-up seen triggered by Santos deal
OCTOBER 15, 2019
Santos, which already has an unconventional exploration program in preparation further to the west in the NT's McArthur Basin. said the ramp-up of activity there, including two wells to be drilled next year, would benefit exploration in the South Nicholson basin.
"Given the proximity to the Northern Gas Pipeline, the farm-in permits are well located to supply the East Coast domestic and LNG export markets," a Santos spokeswoman said, referring to the pipeline that connects the NT to the east coast gas grid, which includes a link to Queensland's LNG export plants in Gladstone.
The Darwin reshuffle could involve Japan's Inpex Corporation and Japanese LNG customers at the Darwin project taking up stakes in Barossa, a $US4.7 billion ($6.9 billion) gas project heading toward a final go-ahead in early 2020.
The commitment of another Darwin LNG partner, Italy's Eni, is regarded as less certain, with consultancy Wood Mackenzie saying in August it regarded it as potentially interested in selling its gas interests in Australia to focus on "more attractive" opportunities in the Middle East and Mozambique.
The $US1.465 billion Santos-Conoco deal is the first among some $US32 billion of oil and gas assets around the Australian region identified by Wood Mackenzie as potentially to be traded over the next few years. Senior analyst David Low said it would act as a "catalyst" for the further alignment of equity across the Darwin LNG project and its existing and new gas supply sources.
South Korea's SK E&S, the third partner in Barossa alongside Santos and Conoco, has already signed an agreement to buy a 25 per cent stake in Bayu-Undan and Darwin LNG.
Giant LNG importer JERA, which owns 6.1 per cent of Darwin LNG and Bayu-Undan, is also expected to buy into Barossa to align its interests across the ventures.
Shares in Santos meanwhile retreated as much as 3.1 per cent on Tuesday after Monday's 5.7 per cent jump as analysts pondered the value of the deal for Santos, given several uncertainties which will play into the equation.
These include the terms on which gas from the Barossa field are processed at the Darwin LNG plant and the final costs for abandonment of the Bayu-Undan field, for which Conoco is said to have guided $US600 million. Also still up in the air is the final cost of developing the Barossa field, the price reviews under way for existing long-term sales contracts for Darwin LNG and the new contracts that are required to underpin the additional 10 years of the LNG plant operation using the new gas supply source.
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