Western Australia’s biggest domestic gas supplier, Santos, has increased its presence in Australia by completing the acquisition of ConocoPhillips’ northern Australia and Timor-Leste assets in May.
The acquisition came at a reduced rate of US$1.265 billion plus an increased contingent payment of US$200 million subject to a final investment decision (FID) on the Barossa Project, in line with increased market volatility in the wake of COVID-19.
With the acquisition, Santos will operate and control of a number of high-quality natural gas assets and LNG infrastructure, and has also increased its interest in Bayu-Undan and Darwin LNG to 68.4 per cent at completion.
Santos’ interest in the Barossa Project that will backfill Darwin LNG has also increased to 62.5 per cent.
The Barossa Project area was originally drilled by Shell in 1973, before being handed over to ConocoPhillips and Santos, which drilled between 2005 and 2007, with FEED activities commencing in April 2018.
In March this year, Santos advised that the final investment decision (FID) would likely by deferred until business conditions improve, leading to the increased contingent payment.
Santos Managing Director and Chief Executive Officer Kevin Gallagher said: “As a foundation partner in Bayu-Undan and Darwin LNG, and an existing partner in Barossa, we know these assets well.
“We are delighted to assume operatorship and continue to progress the Barossa Project so that a final investment decision can be made when market conditions permit,” he said. “We welcome the ConocoPhillips’ Australia-West employees to Santos and look forward to getting on with the process of integrating our two businesses to create one high performing team.”
ConocoPhillips executive vice president and chief operating officer Matt Fox said: “Santos has a strong presence in the Australian oil and gas industry and is already a co-venturer in the Bayu-Undan, Darwin LNG and Barossa projects. We are pleased to close this sale with an Australian company that will help continue the development of Australia’s oil and gas resources.”
Reinforcing Santos’ position as Western Australia’s biggest domestic gas supplier, the company says it has entered into a new gas supply agreement with Gold Fields for its three gold mines in the state.
The agreement means Santos will supply nearly 5.5 petajoules of natural gas from its Varanus Island gas plant over three years, starting on 1 July 2020.
“We are delighted Gold Fields Limited has come back to Santos after a short hiatus, reinforcing our position as Western Australia’s biggest supplier of gas to the local market,” Mr Gallagher said. “Santos supplies around 40 per cent of the State’s total domestic demand, and we are committed to ongoing investment in developing new gas supplies in Western Australia.”