<article><p class="lead">Australian independent Santos has pushed back the final investment decision (FID) on its Barossa gas Darwin LNG backfill project into 2021, as it looks to finalise offtake agreements. </p><p>This is the second time that the firm has <a href="https://direct.argusmedia.com/newsandanalysis/article/2133990">deferred the FID</a> this year on the project in the Bonaparte basin offshore the Northern Territory. "I want some offtakes in place before we move to FID," Santos chief executive Kevin Gallagher said. "I will be patient and get the right contracts in place before we move to FID."</p><p>Gallagher is keen to see a greater exposure in indexed prices rather than oil linked in the offtakes, because he sees index pricing more closely aligned to the cost of supplies.</p><p>Santos yesterday agreed the terms by which Barossa gas will be transported to the Santos-operated 3.7mn t/yr Darwin LNG project and the third-party treatment terms for processing the gas. This leaves the offtake agreements as the main issue stalling a FID for Barossa. The firm expects to deliver the first gas supplies from Barossa to Darwin in the first half of 2025.</p><p>The associated lifespan extension to 2050 project at Darwin is FID ready and only dependent on the Barossa FID. Santos has reduced its expected capital spending for the Darwin upgrade by $100mn to $500mn.</p><p>Santos is also pursuing its infill drilling on the Bayu-Undan field in the Timor Sea, which is the gas field that currently provides all the feedstock for Darwin LNG. This could extend the life of the field by 6-12 months, reducing the period that the plant is without gas before Barossa comes on stream. Santos took over the operatorship of Darwin LNG in May after buying <a href="https://direct.argusmedia.com/newsandanalysis/article/2109149">ConocoPhillips' northern Australia assets</a>.</p><p>Santos expects to receive all consents to sell a 25pc interest in Darwin LNG and Bayu-Undan to South Korea's SK E&amp;S for $390mn by the end of the year. It is also in the process of finalising its sale of a 12.5pc interest in Barossa to Japanese energy firm Jera for an undisclosed sum. Jera, a joint venture between Japanese utilities Tepco and Chubu Electric Power, is one of the world's largest LNG buyers.</p><p>Santos will hold a 43.4pc interest in Darwin LNG and a 50pc interest in Barossa, following the completion of these two sell-down transactions.</p><p class="bylines">by Jo Clarke</p></article>
