Barossa FID to spark $5.5b northern investment

Santos has given the green light to its $4.7 billion Barossa gas and condensate project located offshore the Northern Territory. The final investment decision (FID) to proceed with Barossa also kick-starts a $785 million investment in the Darwin LNG life extension and pipeline tie-in projects, which will extend the facility life for around 20 years. The Barossa project and Darwin LNG life extension are expected to create 600 jobs throughout the construction phase and secure 350 jobs for the next 20 years of production at the Darwin LNG facility. Santos describes Barossa as one of the lowest cost, new LNG supply projects in the world and says it will give Santos and Darwin LNG a competitive advantage in a tightening global LNG market. The project represents the biggest investment in Australia’s oil and gas sector since 2012. Related: Santos granted new gas ground for domestic market Santos managing director and chief executive officer Kevin Gallagher said FID on Barossa was consistent with Santos’ strategy for disciplined growth utilising existing infrastructure around the company’s core assets. Santos managing director and chief executive officer Kevin Gallagher. “Our strategy to grow around our five core asset hubs has not changed since 2016. As we enter this next growth phase, we will remain disciplined in managing our major project costs, consistent with our low-cost operating model,” Mr Gallagher said. “As the economy re-emerges from the COVID-19 lockdowns, these job-creating and sustaining projects are critical for Australia, also unlocking new business opportunities and export income for the nation. "The Barossa and Darwin life extension projects are good for the economy and good for local jobs and business opportunities in the Northern Territory." The move comes less than a year since Santos completed the acquisition of ConocoPhillips’ northern Australia and Timor-Leste assets. “I am delighted to welcome our Barossa joint venture partner SK E&S as a partner in Bayu-Undan and Darwin LNG and appreciate their support for today’s Barossa development decision,” Mr Gallagher said. The Barossa development will comprise 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. First gas production is targeted for the first half of 2025. Key Barossa construction contract awarded Last week Santos announced that the major contract for the construction, connection and operation of the Floating Production, Storage and Offloading vessel (FPSO) had been awarded to international vessel builder and operator BW Offshore, subject to the final investment decision (FID) on Barossa. This represents the largest capital expenditure component of the $4.7 billion (US$3.6 billion) offshore gas and condensate project. At the end of last year, Santos announced the tolling arrangements had been finalised for Barossa gas to be processed through Darwin LNG and that Santos had signed a long-term LNG sales agreement with Diamond Gas International, a wholly-owned subsidiary of Mitsubishi Corporation, for 1.5 million tonnes of Santos-equity LNG for 10 years with extension options. Santos has also signed Memoranda of Understanding with SK E&S and Mitsubishi to jointly investigate opportunities for carbon-neutral LNG from Barossa, including collaboration relating to Santos’ Moomba CCS project, bilateral agreements for carbon credits and potential future development of zero-emissions hydrogen. “We will continue to explore the potential for carbon-neutral LNG from Barossa as part of our commitment to lower global emissions and as a company, reach our net-zero emissions target by 2040,” Mr Gallagher said.

Barossa FID to spark $5.5b northern investment

Industry Queensland

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