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Australian DLNG's 'only gas supply' option gets regulatory approval: Santos

The Darwin LNG export facility in Australia's Northern Territory has hadregulatory approval given to one project, Barossa-Caldita, that will be ableto supply gas in time for the end of production at its current source ofsupply, the Bayu Undan field, Santos said Wednesday.

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Australia's National Offshore Petroleum Safety and EnvironmentalManagement Authority has accepted the Barossa-Caldita offshore projectproposal, which sees it on course to move to FEED in the second quarter, thecompany said.

"This is one of the major regulatory steps leading to offshore projectdevelopment and petroleum production, and it reinforces Barossa's position asthe only gas supply source capable of meeting Darwin LNG's timetable," Santosmanaging director and chief executive officer Kevin Gallagher said.

Santos holds a 25% interest in the Barossa-Caldita joint venture and isalso a partner in Darwin LNG with an 11.5% interest.

ConocoPhillips, the operator of Darwin LNG/Bayu Undan as well asBarossa-Caldita, will still need to juggle the interests of the other DLNGparticipants.

"ConocoPhillips' priority is to successfully backfill Darwin LNG from2023. As Darwin LNG Operator, we will consider all viable options and seek toselect the best value outcome in the interests of the Darwin LNG JV," aspokesman for the company said.

Along with ConocoPhillips (56.94%) and Santos (11.5%) -- INPEX (11.38%), Eni(10.99%) and Tokyo Timor Sea Resources (9.19%) have stakes in BayuUndan/Darwin LNG. Of DLNG's participants, only Santos and ConocoPhillipshave interests in Barossa-Caldita, at 25% and 37.5% respectively. An affiliateof Korean conglomerate SK Group (37.5%) also has an interest in the latter.

The Woodside Petroleum-led Sunrise project has also been a candidate forfuture supply for DLNG, but this has long been complicated by a border disputebetween Australia and Timor Leste.

The two countries recently signed treaty agreed that if the Greater Sunrisefields are developed by means of a pipeline to an LNG processing plant inAustralia, the upstream revenue would be in the ratio of 20% to Australia and80% to Timor Leste, and 30% to Australia and 70% to Timor Leste in the eventof a pipeline to an LNG processing plant in Timor Leste.

"Barossa continues to progress well as a DLNG backfill option and we are oncourse to move the project to FEED in the second quarter of this year," theConocoPhillips spokesman said.

Bayu Undan gas is fully contracted to Darwin LNG until 2022 and there arethree infill wells being drilled this year in order to extend the field'slife from around 2020 to roughly 2022 to provide a greater degree ofproduction assurance, he said.

The Barossa development includes a permanently moored FPSO facility, subseaproduction system, supporting in-field subsea infrastructure in the field anda subsea gas export pipeline. It is proposed to connect the pipeline to theexisting Bay Undan to Darwin pipeline which feeds into DLNG.

--Nathan Richardson, newsdesk@spglobal.com

--Abache Abreu, abache.abreu@spglobal.com

--Edited by Wendy Wells, wendy.wells@spglobal.com