LNG

Santos, the Australian operator of the Gladstone and Darwin LNG projects and with a portfolio in Papua New Guinea, reported a more than three-fold increase in net profits of US$2.11 billion, a reward for its years of investment in the industry.

McDermott International of the US was awarded the main engineering contract from Australian LNG plant operator Santos for the offshore Bayu-Undan infill well that serves the Darwin liquefaction export plant in the Northern Territory.

McDermott said the contract is for subsea, engineering, procurement, construction and installation (EPCI) work for the Phase 3C project in the Timor Sea, located about 310 miles (500 kilometres) off the northwest coast of Darwin and 124 miles (200km) off the southeast coast of Timor-Leste.

“McDermott has a strong track record of delivering complex subsea projects in the Asia Pacific,” said Mahesh Swaminathan, McDermott's Senior Vice President for the region.

“We will continue that tradition as we demonstrate our execution expertise and safety excellence throughout this project,” added Swaminathan.

The Bayu-Undan field is one of Timor-Leste's largest gas fields and Santos become operator in May 2020 after buying out the stake of US major ConocoPhillips.

Preliminary work on the Phase 3C project commenced in May 2021 and the scope will be managed by McDermott's office in Perth, Western Australia.

“The McDermott scope involves a tieback of a single in-field well to existing facilities re-using existing flexible flowline with a new umbilical and certain infrastructure,” explained the Houston, Texas-based company.

Santos, as operator of the Bayu-Undan Joint Venture, has already started the new infill drilling programme in the field in the waters of Timor-Leste.

The programme was given a final investment decision in January 2021 and comprises three production wells for additional natural gas and liquids reserves, extending field life as well as production from the offshore facilities and the Darwin liquefaction plant.

The Adelaide-based company said the wells would be drilled using the “Noble Tom Prosser” jack-up rig, with first production expected in the third quarter of 2021.

Santos believes the infill drilling programme will add over 20 million barrels of oil equivalent gross reserves and production at a low cost of supply and importantly extend the life of Bayu-Undan and the jobs and investment that rely on it.

Santos noted that more than 400 Timorese are currently working on Bayu-Undan activities and this will make an important economic contribution to Timor-Leste.

The President of the Timor-Leste National Petroleum and Minerals Authority, Florentino Soares Ferreira, has said the Santos-led venture was important in the history of Timor-Leste.

“It will mark the first drilling campaign in the Bayu-Undan field as Timor-Leste offshore waters, following ratification of the Maritime Boundary Treaty (MBT) between Timor-Leste and Australia,” stated Soares Ferreira.

Santos as operator has a 43.4 percent stake in Bayu-Undan. The remaining stakes are held by South Korea’s SK E&S (25 percent), Inpex Corp. of Japan (11.4 percent), Italy’s Eni (11 percent), while Japanese utilities JERA Co. Inc. and Tokyo Gas own 6.1 percent and 3.1 percent respectively.

Australian LNG plant operator Santos has signed a binding long-term LNG supply and purchase agreement (SPA) for the Barossa gas project with Mitsubishi Corp., the  prominent Japanese sector player with stakes in the US Cameron LNG plant in Louisiana and LNG Canada in British Columbia.