Regional LNG: Santos, partners approve FID on $16b GLNG project

Australian energy firm Santos announced Thursday that the GLNG partners have taken the final investment decision (FID) approving development of the US$16 billion 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, the company said.

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,? 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-kilometre 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 $16 billion capital expenditure includes $2 billion in contingencies. (denny)