July 19, 2024 [LNG Prime]- The Barossa gas project, which will supply feed gas to the Santos-operated Darwin LNG plant, is 77 percent complete and remains on target for first production in the third quarter of 2025, according to Australia’s Santos.

Santos revealed this in its second quarter report issued on Thursday.

Back in 2021, Santos took a final investment decision for its $3.6 billion Barossa project.

Natural gas will be extracted from the Barossa field, located in Commonwealth waters about 285 kilometers offshore north-north west from Darwin, and transported via a pipeline to the existing Darwin LNG facility.

In November last year, the last LNG cargo produced from the Bayu-Undan gas field has sailed from the Santos-operated Darwin LNG plant in Australia’s Northern Territory.

The final LNG shipment from Bayu-Undan left the 3.7 mtpa Darwin LNG plant at Wickham Point on November 11.

The Darwin LNG plant launched operations in 2006 and the facility is now being readied for the next 20 years, in preparation for the start of Barossa gas production in 2025.

To prepare for Barossa gas, Santos is working on the Darwin LNG life extension project.

FPSO and gas pipeline

Santos said in its quarterly report the FPSO integration and pre-commissioning activities continue to proceed to plan in Singapore, while all 16 modules have now been installed on the FPSO.

Also, installation of the 262km gas export pipeline was completed in early May, and testing activities were completed in June.

Santos said drilling activities continued with the second well drilled, cased, and suspended above the reservoir, while the third well of the six well program was spudded in May and drilling is underway.

Construction activities for the Darwin Pipeline Duplication commenced during the second quarter, with near shore activities in Darwin harbor in progress, it said.

PNG LNG cargoes

During the second quarter, the ExxonMobil-operated PNG LNG project in Papua New Guinea shipped 27 cargoes of LNG, the same number of LNG cargoes as in the same quater last year and in the previous quarter, according Santos.

Santos currently has a 42.5 percent stake in the LNG export plant in Caution Bay following the Oil Search merger, an it earlier this yer agreed to amend the terms of sale of its 2.6 percent stake in the LNG project to Papua New Guinea’s national oil and gas company Kumul Petroleum.

ExxonMobil holds a 33.2 percent operating interest in PNG LNG which is able to produce more than 8.3 million tonnes of LNG annually, an increase of 20 percent from the original design specification of 6.9 mtpa.

Santos said in its quarterly report on Thursday that “steady” production continued at PNG LNG, supported by “strong” production from Santos-operated fields.

PNG LNG produced about 2 million tonnes in the second quarter, slightly down compared to the prior quarter and down from 2.09 million tonnes in the same quarter last year.

Gross LNG production was down on the previous quarter as a result of Hides field natural decline, which was partially offset by continued high compression reliability from the Santos-operated Gobe and Kutubu fields, Santos said.

GLNG

As per the Santos-operated Gladstone LNG export plant on Curtis Island near Gladstone, the facility shipped 22 LNG cargoes during the second quarter, the same as in the second quarter last year and five less compared to the prior quarter.

The 7.8 mtpa facility produced 1.33 million tonnes of LNG during the quarter, up from 1.26 million tonnes in the same quarter last year and down from 1.64 million tonnes in the prior quarter, according to Santos.

Santos said LNG production was lower than the previous quarter due to seasonal shaping of the project’s domestic gas commitment.

Over the course of the year, the number of cargoes shipped are seasonally shaped to be higher in the first and fourth quarters and lower in the second and third quarters to support the east coast domestic gas market.

GLNG has committed to swap 18 PJs (gross) of gas into the domestic market over the second and third quarters of 2024, which is on track to be achieved, Santos said.

Based on current shipping plans, LNG production is expected to remain around 6 mtpa for the full year, it said.

Sales revenue down

The independent LNG producer said on Thursday that its April-June sales revenue reached $1.31 billion.

This marks a drop compared to $1.33 billion last year and also compared to $1.39 billion in the prior quarter.

Second quarter production of 22.2 mmboe was lower than 22.8 mmboe in the same period last year but it rose compared to 21.8 mmboe in the prior quarter.

The Australian LNG player said its average realized LNG price of $11.47 per MMBtu in the second quarter was lower compared to 12.68 per MMBtu in the prior quarter and from 11.96 per MMBtu in the same quarter in 2023.

According to Santos, average realized LNG prices were lower due to lower realized prices from oil linked sales contracts reflecting lagged Japan Customs-cleared Crude (JCC) prices and the impact of lower spot market prices.

Three-month lagged JCC averaged $84.19/bbl in the second quarter of 2024 compared to $92.30/bbl in the first quarter.

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