Santos, Total, Petronas, Kogas to Develop $16B Queensland Project
Santos and its GLNG partners (Total, Petronas and Kogas) have taken the final investment decision approving development of the US $16 billion, 7.8 mtpa GLNG project in Queensland.
Development approval triggers major works for upstream field development, pipeline and LNG plant facilities at Gladstone. Orders will now be placed for long lead items such as line pipe, compressors and LNG plant components.
GLNG will create 5,000 jobs in construction in addition to 1,000 permanent jobs in production. It is expected that 1,500 jobs will be created in the first half of 2011.
Santos Chief Executive David Knox acknowledged approval of the project came at a very difficult time for the state of Queensland, which is currently confronting the human and economic cost of severe flooding across many communities.
Queensland Premier Anna Bligh said the GLNG project would cement Queensland's role as a significant producer of LNG, promised billions of dollars of investment in regional communities and would see the creation of 6,000 jobs.
"Proceeding now with projects like this will be a tremendous boost to the Queensland economy as we recover from the devastating impact of the floods," Ms. Bligh said.
GLNG is a joint venture between Santos (30%) and three of the world's largest LNG companies, PETRONAS (27.5%), Total (27.5%) and KOGAS (15%).
GLNG includes the development of coal seam gas (CSG) resources in the Bowen and Surat Basins in south-east Queensland, construction of a 420-kilometer gas transmission pipeline from the gas fields to Gladstone, and two LNG trains with a combined nameplate capacity of 7.8 million tonnes per annum (mtpa) on Curtis Island.
First LNG exports are expected to commence in 2015. GLNG has binding LNG sales agreements with PETRONAS and KOGAS for 7 mtpa in aggregate.
The project has a gross capital cost of US $16 billion from FID until the end of 2015, when the second train is expected to be ready for start-up. Santos' 30% share of capital expenditure is US $4.8 billion. The US $16 billion capital expenditure includes US $2 billion in contingencies.
Mr. Knox said approval of GLNG was a significant milestone in Santos' history.
"Already Australia's largest domestic gas producer, GLNG confirms Santos as a major energy supplier to the growing economies of Asia."
"The commitment we are making today delivers on the strategic vision to transform Santos into a significant exporter of LNG."
"I would like to acknowledge the strong commitment of our partners and the Queensland and Federal governments to make this project a reality," Mr. Knox said.
Federal Minister for Resources and Energy, Martin Ferguson AM MP said that the benefits of the Gladstone LNG project will be both immediate and continue over the longer term.
"This project and economic development more generally is important in underpinning the skills, tax revenue, wealth and capacity to respond and re-build in the aftermath of the current flood crisis in Queensland," Minister Ferguson said.
Mr. Knox repeated Santos' commitment to maintain the highest environmental and safety standards in developing the GLNG project, and to continue close engagement with local communities during the construction and operation of the venture.
Santos completed a $500 million institutional placement in December 2010 as the final step in fully funding the equity required for its share of GLNG. Santos expects Standard & Poor's to affirm its BBB+ credit rating.
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