October 14, 2024 [Rigzone]- Santos Ltd. and its partners have sealed new bank borrowings totaling $800 million for a project to extend the productive life of an Australian liquefied natural gas (LNG) project whose depleting source field stopped supply late last year.
“With these facilities in place, Darwin LNG is well-funded to complete the life extension works scheduled for mid-2025 and it positions Darwin LNG to consider future expansion of this important infrastructure, including through the potential provision of third-party carbon capture services in Darwin”, chief executive Kevin Gallagher said in a company statement Wednesday.
The senior secured, partially amortizing facilities consist of a seven-year $350 million loan due 2031 and a 12-year $450 million loan maturing 2036, the oil and gas exploration and production company said in the statement on its website.
“The facilities received strong support from existing and new syndicated banking relationships and the proceeds will be used to fund the DLNG life extension works”, Darwin LNG operator Santos said. It did not name the backers.
In 2021 Adelaide-based Santos reached a positive final investment decision (FID) on the Barossa gas field project, securing a new source for Darwin LNG, which had been supplied by Timor-Leste’s Bayu-Undan field.
Single-train Darwin LNG, located at Wickham Point in the northwest of the Northern Territory on the Timor Sea, started production 2006. It has a designed capacity of about 3.7 million metric tons a year. The facility received feed gas from Bayu-Undan, which is about 500 kilometers (310.7 miles) northwest of Darwin city, via a subsea pipeline. The facility has a central production and processing complex with a floating production, storage and offloading unit for condensate and liquefied petroleum gas, as well as an unmanned wellhead platform.
While Santos confirmed in the statement Wednesday that the source field in the Southeast Asian country had stopped supplying Darwin LNG late 2023, it said in a financial update August 21, 2024, that Bayu-Undan would continue sending gas to the Northern Territory in the second half of 2024.
The new source field, Barossa, is planned to start production 2025 under a $600 million development project. Barossa will extend the life of Darwin LNG for around 20 years.
“The Barossa development will comprise a Floating Production, Storage and Offloading vessel, subsea production wells, supporting subsea infrastructure and a gas export pipeline tied into the existing Bayu-Undan to Darwin LNG pipeline”, Santos said in a press release March 30, 2021, announcing the FID.
“Barossa is one of the lowest cost, new LNG supply projects in the world and will give Santos and Darwin LNG a competitive advantage in a tightening global LNG market”, it said then. “The project represents the biggest investment in Australia’s oil and gas sector since 2012”.
Santos owns a 43.4 percent stake in Darwin LNG, which has investments from major LNG-buying countries Japan and South Korea. SK E&S Co. Ltd. holds 25 percent, INPEX Corp. has 11.4 percent, Eni SPA 11 percent, JERA Co. Inc. 6.1 percent and Tokyo Gas Co. Ltd. 3.1 percent.
In the Barossa gas project, Santos owns a 50 percent operating stake. South Korea’s SK E&S owns 37.5 percent and Japan’s JERA owns the remaining 12.5 percent.
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