Santos awards Barossa FPSO contract
Santos, as operator of the Barossa joint venture, on March 24 announced the award of the project's contract for the construction, connection and operation of the floating production, storage and offloading vessel (FPSO).
The FPSO services contract awarded to BW Offshore is subject to a final investment decision (FID) on Barossa. It represents the largest capital expenditure component of the approximately US$3.6bn Barossa offshore gas and condensate project to backfill Darwin LNG, Santos said. The contract contains an upfront pre-payment and an option to buyout and achieves an overall reduction of approximately US$1bn in capital expenditure.
Santos CEO Kevin Gallagher said the awarding of this contract builds on the momentum of the Barossa project over the past six months and is the final milestone ahead of FID. Barossa project FID is anticipated in the coming weeks with the first gas targeted for the first half of 2025, he added.
"The decision to proceed with an FPSO services contract maintains a low ongoing operating cost while engineering enhancements have significantly reduced the project's carbon footprint," Gallagher said. "This reduction in capital expenditure makes Barossa one of the lowest cost of supply projects in the world for LNG and will provide new supply into a tightening LNG market."
The FPSO will be built in South Korea and Singapore before being towed and permanently located in the field where it will process natural gas prior to its transport via pipeline to Darwin LNG. Condensate will be stored on the FPSO for periodic offloading.
Barossa will provide the next source of gas for the existing Santos-operated Darwin LNG plant once current reserves from the Santos-operated Bayu-Undan field in the Timor Sea have been depleted.
At the end of last year, Santos announced that transport and processing agreements had been finalised for Barossa gas to be tolled through Darwin LNG and it signed a long-term LNG sales agreement with Diamond Gas International, a wholly-owned subsidiary of Japan's Mitsubishi Corporation.
It currently holds a 62.5% operated interest in the Barossa joint venture along with partner SK E&S, which owns 37.5%. Santos is finalising an agreement to sell a 12.5% interest in Barossa to Darwin LNG partner Jera and has a binding agreement to sell 25% interests in Bayu-Undan and Darwin LNG to SK E&S, subject to FID on Barossa.