Energy company Santos has signed a Letter of Intent (LOI) to sell 12.5% stake in Barossa offshore project in Australia, to Japan’s JERA, a joint venture between TEPCO FP and Chubu Electric Power Company.
The Barossa offshore project involves the development of Barossa and Caldita gas-condensate fields in the Bonaparte Basin of Timor Sea, approximately 300km north-west of Darwin, Northern Territory.
The project, which will provide a new source of gas to the existing ConocoPhillips-operated Darwin LNG facility, is owned by ConocoPhillips Australia Exploration and SK E&S Australia with 37.5% stakes each while Santos holds 25% interest.
JERA owns 6.1% interest in Darwin LNG
Santos expects the LOI with JERA, which currently owns 6.1% interest in Darwin LNG, to further partner alignment for the development of Barossa project as backfill for Darwin LNG.
Santos managing director and CEO Kevin Gallagher said: “Santos continues to build alignment between the Darwin LNG and Barossa joint ventures. Following completion of the ConocoPhillips acquisition and the sell-downs to JERA and SK E&S, Santos will hold a 43.4% interest in Darwin LNG and a 50% interest in Barossa.
“We are continuing to advance discussions with other parties for the sale of further equity in the Barossa project in line with our previously stated target ownership level of around 40% to achieve increased partner alignment and prudent future allocation of growth capital. We are also in discussions with buyers for Barossa volumes.”
Santos is also considering deferring final investment decision on Barossa project due to the uncertain economic impact of COVID-19 outbreaks and plunging oil prices.
The LOI, however, is subject to the negotiation and signing of a binding sale and purchase agreement, third-party consents, final investment decision on Barossa, and regulatory approvals.
It is also subject to the completion of ConocoPhillips’ northern Australia and Timor-Leste portfolio acquisition by Santos, regulatory approvals and a final investment decision on Barossa.
In March 2020, Santos agreed to divest 25% stake in Darwin LNG facility and Bayu-Undan gas field to SK E&S for $390m.
