Santos announced that a final investment decision (FID) has been taken to proceed with the US$3.6 billion Barossa gas field development project. The FID also kick-starts the US$600 million investment in the Darwin LNG life extension and pipeline tie-in projects, which will extend the facility life for around 20 years.
“Barossa and Darwin LNG life extension will create 600 jobs throughout the construction phase and secure 350 jobs for the next 20 years of production at the Darwin LNG facility.”
The Barossa development will comprise a 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.”
At the end of last year, Santos announced the tolling arrangements had been finalised for Barossa gas to be processed through Darwin LNG and Santos had signed a long-term LNG sales agreement with Diamond Gas International for 1.5 MMT/Y of Santos-equity LNG for 10 years with extension options.
Barossa FID was the final condition required for completion of the 25% quity sell-downs in Darwin LNG and Bayu-Undan to SK E&S, which is also a partner in Barossa. “Completion of the SK transaction is expected to occur at the end of April and result in net funds to Santos of approximately US$200 million, being the sale price of US$390 million less the forecast cashflows from the 25 per cent interests from the effective date of 1 October 2019 to completion.”
Santos added that it and JERA continue to progress the binding sale and purchase agreement for JERA to acquire a 12.5% interest in Barossa. Completion of the sell-downs to SK E&S and JERA will see Santos’ interests in Bayu-Undan and Darwin LNG change to 43.4% and in the Barossa project to 50%.
Meanwhile, Energy Economics and Financial Analysis (IEEFA) reported that Barossa gas field development has the unfriendly tag of having more carbon dioxide than any gas currently made into LNG. “The gas contains so much carbon dioxide (CO2) that most of it will have to be separated and vented offshore to meet the requirements of the Darwin LNG plant it will be piped to. Barossa gas has three times the CO2 content that the Darwin LNG plant facility can handle.”

 

Backgrounds quoted from the Global LNG Database® :

On 24 Mar. 2021, Santos announced that it has selected BW Offshore (BWO) as main contractor for the Barossa gas field development project’s construction, connection and operation of the Floating Production, Storage and Offloading vessel (FPSO) contract which represents the largest capital expenditure component of the approximately US$3.6 billion Barossa project to backfill Darwin LNG.
However, the Australian operator has reminded that the contract award is subject to a final investment decision (FID) on Barossa backfill LNG project. “The contract contains an upfront pre-payment and an option to buyout, and achieves an overall reduction of approximately US$1 billion in capital expenditure.”
Santos CEO Kevin Gallagher said that the decision to proceed with an FPSO services contract maintains a low ongoing operating cost while engineering enhancements have significantly reduced the project’s carbon footprint. “This reduction in capital expenditure makes Barossa one of the lowest cost of supply projects in the world for LNG and will provide new supply into a tightening LNG market.”
The FPSO will be built in South Korea and Singapore before being towed and permanently located in the field where it will process natural gas prior to its transport via pipeline to Darwin LNG. Condensate will be stored on the FPSO for periodic offloading, Santos said in its announcement, adding that Barossa will provide the next source of gas for the existing Santos-operated Darwin LNG plant once current reserves from the Santos-operated Bayu-Undan field in the Timor Sea have been depleted.

 

 

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