Santos Ltd., Adelaide, let a contract for the construction, connection, and operation of the floating production, storage and offtake (FPSO) vessel for Barossa gas-condensate field development in the Timor Sea to BW Offshore.
The contract is subject to a final investment decision for the $3.6 billion Barossa project which is designed to backfill gas supply to the Darwin LNG plant currently being fed by gas from Bayu-Undan field.
The contract contains an upfront pre-payment and an option to buyout that will achieve an overall reduction of about $1 billion in capital expenditure, Santos said. The lease and operate contract has a firm period of 15 years, with 10 years of options.
The award replaces an earlier deal, reported in October 2019, awarding the FPSO contract to MODEC International Inc. which, at the time, Santos said was the result of a front-end engineering and design competition.
The Barossa project was put on hold during the low oil price regime and COVID-19 pandemic in early 2020, but development has new momentum with a final investment decision anticipated “in the coming weeks with first gas targeted for the first half of 2025,” the company said.
The FPSO will be a turret-moored vessel with a processing capacity of 800 MMcfd of gas and 11,000 b/d of condensate.
The vessel will be built in South Korea and Singapore before being towed to Barossa field in retention lease NT/RL5 about 300 km north of Darwin and connected to a 260-km pipeline that will feed into the existing pipeline to Darwin from Bayu-Undan field.
At end-2020, Santos noted finalized transport and processing agreements for Barossa gas to be tolled through Darwin LNG. Additionally, a long-term LNG sales agreement was let to Diamond Gas International, a subsidiary of Mitsubishi Corp.
Santos holds a 62.5% operating interest in the Barossa JV. SK E&S of South Korea holds 37.5%.
Santos is finalizing an agreement to sell down a 12.5% interest in the project to its Darwin LNG partner JERA and has a binding agreement to sell 25% interest in Bayu-Undan and Darwin LNG to SK E&S subject to FID on Barossa.
