Regional LNG: Total farms in Australia's GLNG project

Australia-exchange listed energy firm Santos Limited announced on Thursday that it has executed an agreement with French oil giant Total for the sale of a 15 percent interest in GLNG project for A$650 million.

In parallel, Malaysian oil, gas firm PETRONAS has also entered into an agreement to sell a 5 percent interest in GLNG to Total, Santos said in statement.

Upon completion of the Santos and PETRONAS sale transactions, the ownership structure of GLNG will be: Santos 45%; PETRONAS 35%; Total 20%.

?We are pleased to welcome Total into the GLNG project as a fully integrated joint venture partner. Total brings substantial technical LNG plant and project management expertise with respect to major LNG developments,? Santos Chief Executive Officer David Knox said.

Christophe de Margerie, President and Chairman of Total said: ?In line with the Group?s partnership strategy, Total is teaming up with Santos for its expertise in gas production in Australia and with state-owned Malaysian oil and gas company PETRONAS for its experience in marketing LNG in Asia. Total will bring to the project its experience in successfully managing major projects such as the construction of gas liquefaction plants, and its capacity to market LNG to the Asian market.?

GLNG has today also signed a binding Heads of Agreement (HoA) for the sale of 1.5 million tons per annum (mtpa) of LNG to Total for a period of 20 years commencing in 2014. The Agreement provides for 1 mtpa of the contracted volumes to be delivered from GLNG train 1 and 0.5 mtpa from train 2.

In addition, GLNG and PETRONAS have increased the contracted volumes to 3.5 mtpa under their previously announced binding HoA. The Agreement provides for 2.3 mtpa of the PETRONAS contracted volumes to be delivered from GLNG train 1 and 1.2 mtpa from train 2. Other key terms of the Agreement remain in place including the 20 year term.

In combination, the Total and PETRONAS binding Agreements now provide for the sale by GLNG of 5 mtpa of LNG in aggregate, underpinning the development of a two train project. The combined value of the GLNG offlake agreements exceeds A$100 billion.

GLNG remains in detailed ongoing discussions with a number of Asian parties in relation to further potential LNG sales and equity in the project. These parties include KOGAS, the world?s largest LNG buyer, Santos said.

Santos will retain its current role as GLNG upstream operator of the coal seam gas fields. The existing GLNG joint operating company will continue to operate the pipeline and LNG plant. Total will have the opportunity to second staff into the GLNG project.

GLNG is a multi billion dollar project set to deliver the world?s first major coal seam gas (CSG) to LNG operation. The project involves extracting gas from the Surat and Bowen Basins in Queensland?s south west, and piping it 435km to Gladstone where it will be chilled to minus 161 degrees Celsius and liquefied for transport by ship to overseas markets. (denny)