PERTH (miningweekly.com) – ASX-listed gas producer Santos and its joint-venture partner (JV) in the Gladstone liquefied natural gas (GLNG) project, Petronas, have agreed to sell a 20% stake in the project to Total.
Santos said in a statement that it had sold 15% of its 60% stake in GLNG to Total for a total of A$650-million, while Petronas had sold off 5% of its own interest in the project.
The structured ownership of GLNG now saw Santos owning 45% of the project, with Petronas’ stake at 35% and Total coming in at 20%.
Santos CEO David Knox said on Thursday that the sale agreement with Total was a landmark agreement for the Australian LNG industry, and added that the GLNG transaction represented the first major investment that Total had made in an LNG project using unconventional gas.
“Total brings substantial technical LNG plant and project management expertise with respect to major LNG developments,” Knox said.
In addition, Santos and Total would now also explore potential further cooperation with respect to commercialising Santos’ resources in Australia.
Total president and chairperson Christophe de Margerie added that in line with the group’s partnership strategy, Total was teaming up with Santos for its expertise in gas production, and with Petronas for its experience in marketing LNG in Asia.
Knox noted that proceeds from the asset sale transaction would be used to fund Santos’ significant pipeline of growth projects, combined with general corporate purposes. This would include funding its 45% share of the GLNG project cost.
Meanwhile, GLNG has also signed a binding heads of agreement with Total for the sale of 1,5-million tons a year of LNG, for a period of 20-years, starting in 2014.
The project vehicle also extended its heads of agreement with Petronas, increasing the offtake from two-million tons a year to 3,5-million tons a year.
In combination, the Total and Petronas binding agreements provided for the sale of five-million tons a year of LNG in aggregate, underpinning the development of a two train project, said Knox.
The combined value of the GLNG offtake agreements now exceeded A$100-billion.
“With five-million tons a year of LNG offtake now secured by binding agreements, GLNG has affirmed its leadership in coal seam gas to LNG development.
GLNG continues to target final investment decision this year, subject to all regulatory and partner approvals being in place,” said Knox.
In light of the revised JV structure and increased LNG offtake obligation on Petronas, the Malaysian company would no longer have to make additional payments to Santos upon reaching final investment decisions for expansion trains.
Santos would retain its current role as GLNG upstream operator of the coal seam gas field, and the existing GLNG joint operating company would continue to operate the pipeline and LNG plant.
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