Santos said today that it has signed a $300 million deal to sell a 12.5% interest in the Barossa project in Australia to Japan’s JERA.
The effective date of the sale of the Barossa interest is 31 March 2020 and completion is expected in the first half of 2022. Upon completion, JERA will reimburse Santos for its share of capital expenditure on the project from the effective date to completion, with the total consideration due to Santos at completion expected to be about $300 million.
JERA is an existing partner in Darwin LNG, where gas from Barossa will be processed for export, with a 6.1% stake. The signing of the Barossa sale further builds partner alignment between the Darwin LNG and Barossa joint ventures for the development and processing of Barossa gas through the Darwin LNG facilities, said Santos.
The Barossa project took a final investment decision in March 2021 and is progressing on schedule and budget for first LNG in the first half of 2025, added Santos. The project comprises a floating production, storage and offloading (FPSO) vessel, subsea production wells, supporting subsea infrastructure and a gas export pipeline tied into the existing Bayu-Undan to Darwin LNG pipeline.
“Barossa is one of the lowest cost, new LNG supply projects in the world and will provide Santos and our partners with a competitive advantage in a tightening global LNG market,” said Santos chief executive Kevin Gallagher.
“Santos is also progressing the carbon capture and storage (CCS) opportunity at Bayu-Undan in the Timor Sea, which could provide a CCS hub for projects in the region, including Barossa,” added Gallagher.
“JERA is keen to partner with quality Australian and international partners like Santos and SK E&S, and our investment decision-making processes reflect decades of experience in the international LNG market,” said JERA Corporate Vice President and Managing Executive Officer Yukio Kani.
“Barossa works well as part of our strategy to secure ongoing and reliable LNG supplies and the agreement reflected the ongoing global importance of LNG as a transitional fuel. In addition, JERA will also work with its partners to study the development of zero-emission projects and to evaluate CCS projects. Through these initiatives, JERA will evaluate opportunities for the reduction of CO2 emissions from the Barossa project with the partners,” added Kani.
At completion, which is subject to customary consents, regulatory approvals and JERA entering into binding financing arrangements, the participants in the Barossa project will be Santos (50% and operator), SK E&S (37.5%) and JERA (12.5%).
The participants in Darwin LNG are Santos (43.4% and operator), SK E&S (25% ), INPEX (11.4%), Eni (11%), JERA (6.1%) and Tokyo Gas (3.1%).