LNG

Australian liquefied natural gas operator Santos said its share of LNG output from its stakes in Australian and Papua New Guinea would be increasing in the years ahead as it also gave key dates for final investment decisions and first gas while acknowledging obstructions to its offshore activities by Australian regulatory uncertainty.

Oct 19 (LNGJ) - Australian liquefied natural gas plant operator Santos reported solid third-quarter revenues of US$1.43 billion as the depleted Bayu-Undan gas field for the Darwin LNG plant was run down and regulators continued to block the Barossa in-fill project, which was 68 percent complete. “Drilling activities remain suspended pending assessment and acceptance of the associated environment plan by the regulator,” said Santos. The revenues were higher than the second quarter of 2023 when they amounted to US$1.33Bln, though were lower than the commodity price-boosted US$2.15Bln in the prior-year quarter.

   Kevin Gallagher, Chief Executive of Santos which also has LNG assets in Queensland and Papua New Guinea, said the underlying business performance, combined with a “focus on operational excellence” delivered yet another strong quarter. “Free cash flow of US$1.6Bln year-to-date positions the company well to deliver shareholder returns, backfill and sustain our existing business, while also investing in our major projects and progressing our decarbonisation plans,” Gallagher stated.

Santos, the Australian LNG plant operator pursuing the takeover of Oil Search and its Papua New Guinea LNG assets, reported record quarterly sales revenue of US$1.07 billion and record first-half income of US$2.04Bln, up 12 percent and 22 percent respectively. 

Australian LNG stakeholder Santos, the company that was the subject of takeover interests from the US, the Middle East and China from 2015 to 2018, said that the Chinese ENN Group which had formed a strategic relationship with Santos from that era was no longer a significant shareholder.

Santos, the Australian LNG plant operator and stakeholder, said it reached an agreement to align the company’s interests, under Santos operatorship across four exploration permits in the Bonaparte Basin offshore Northern Australia adjacent to large existing natural gas resources set to be developed for liquefaction and export.

Santos explained that its position in the Bonaparte Basin already includes an 11.5 percent interest in the Bayu-Undan gas-condensate field and in the onshore Darwin LNG plant, as well as having a 25 percent interest in the Barossa gas field.

A Barossa field project is currently in its front-end engineering and design stage and is the leading candidate to backfill the Darwin LNG export plant, operated by ConocoPhillips since 2006 in the Northern Territory and in which Santos is a shareholder.

Santos has signed an agreement with Beach Energy of Australia that will see the companies become 50-50 joint venture partners across four licences NT/P82, NT/P85, NT/P84 and WA-454-P. Santos will operate all four permits.

Santos added that the NT/P82 and NT/P85 permits are located immediately to the south of the Barossa project area, where Santos acquired the 4,347 square kilometres Bethany 3D seismic survey in 2018.

The other two permits are close to the Petrel, Tern and Frigate field complex in the Petrel sub-basin, where separate agreements with Europe-based Neptune Energy see Santos move to 100 percent operated interest in the Tern and Frigate fields and a 40.25 percent interest in the Petrel field, subject to final approvals.

“This alignment of equity and operatorship will allow for a more strategic approach to the next phase of exploration in the region,” said Santos Chief Executive Kevin Gallagher.

“It also reinforces Santos’ significant exploration and existing substantial resource position in offshore Northern Australia and is a good example of industry collaboration aimed at doing things smarter,” added Gallagher.

“We continue to chase material resource opportunities offshore Northern Australia to support our established infrastructure position at Darwin, with an eye to both export and domestic markets,” stated the CEO.

“The next step for these permits is to evaluate new and existing seismic data to build inventory and define potential targets for drilling within the next few years,” said Gallagher.

The CEO added that permits NT/P82 and NT/P85, which are located immediately south of our Barossa project, will be a key focus for this work.

The Barossa gas field development would extend the operating life of the Darwin LNG plant for more than 20 years.

The Darwin plant exports around 3.5 million tonnes per annum of LNG from a single liquefaction Train to Japanese utilities Tokyo Electric Power Co. and Tokyo Gas.

Santos, the Australian operator of the Gladstone liquefied natural gas plant in Queensland and a stakeholder in export plants in Darwin and Papua New Guinea, posted record quarterly LNG revenue as its annual income from the fuel jumped more than 23 percent and a total of 232 cargoes departed from the three facilities.

Santos said in its quarterly activities report that total LNG sales revenue for 2018 amounted to US$1.45 billion versus US$1.17Bln in 2017.

Record overall quarterly sales revenue, including oil and other products, rose by 7 percent to US$1.04Bl, including record quarterly LNG sales revenue of US$449 million, up 39 percent compared with the US$323M reported in the same 2017 quarter and 11 percent on the previous quarter’s US$405M.

The company said its annual realised LNG price was US$9.91 per million British thermal units compared with US$7.31 per MMBtu in 2017.

Fourth-quarter LNG volumes were sold at an average of US$10.96 per MMBtu versus $US10.43 in the previous quarter.

Fourth-quarter production of all products was higher than the prior quarter due primarily to the completion of the of acquisition of Australian company Quadrant Energy on November 27, partially offset by completion of the sale of Santos’s non-core Asian asset portfolio in September 2018.

Quarterly LNG cargoes shipped from Gladstone LNG on Curtis Island, whose other shareholders are Petronas of Malaysia, France’s Total and Korea Gas Corp., amounted to 20 cargoes and 80 shipments for the year compared with 89 in 2017.

“LNG production was lower than the prior year primarily due to the GLNG joint venture partners diverting about 40 PJ of gas (1 billion cubic metres) to the domestic market,” said Adelaide-based Santos.

“The diverted gas, originally slated for export cargoes and equivalent to 700,000 tonnes of LNG, was sold to East Coast domestic customers,” added the company.

Santos also noted that a record 305 coal-seam gas wells were drilled for GLNG in 2018, up 77 percent from the previous year and the wells are likely to number 350-400 in 2019.

Quarterly LNG cargoes shipped from PNG LNG, operated by US major ExxonMobil, amounted to 30 in the last three months of the year and 98 for all of 2018. The number of PNG shipments that departed in 2017 was 110.

“The LNG plant operated at an annualised rate of 8.7 million tonnes per annum during the fourth quarter and achieved daily rates in excess of 9 MTPA annualised.

Annual production in 2018 was, however, lower than the prior year primarily due to the impact of a severe earthquake in the first half,” Santos explained.

“Santos along with the other PNG LNG parties and the Papua LNG Joint Venture are also continuing discussions to build alignment for the proposed construction of three additional LNG Trains at the PNG LNG site, with two Trains to process gas from the Papua LNG project and one Train for the proposed PNG LNG expansion,” added the company.

The Darwin LNG plant, operated in the Northern Territory by ConocoPhillips, shipped 16 cargoes in the quarter and 54 for the year, mainly to Japanese customers.

Santos said that as regards Darwin LNG, detailed engineering design for the offshore Barossa gas development is being advanced across a number of fronts with a final investment decision targeted towards the end of 2019.

“The successful development of Barossa would extend the operating life of Darwin LNG for more than 20 years,” stated Santos.