Santos takes lead on coal seam LNG
The Age
Friday June 19, 2009
SANTOS has stamped itself as the leader in the race to produce liquefied natural gas from Queensland's coal seam gas, signing a binding 2 million-tonne offtake agreement with joint venture partner Petronas.The Queensland Government, as flagged in BusinessDay yesterday, will also sign off on Santos' environmental impact statement tomorrow, making it the only one of the five LNG proposed projects in Queensland to have partially cleared this hurdle.The 13,500-page document will be released for public consultation on Monday with the submission period extended for eight weeks. The Queensland and Federal Governments will then decide whether the 3.5 million tonne-a-year LNG project can proceed on environmental grounds at Curtis Island off Gladstone.The 2 million-tonne deal over 20 years from 2014 includes an option for a further 1 million tonnes of LNG a year.Speaking from Kuala Lumpur, Santos chief executive David Knox said the deal would underpin the first train of LNG and move it to a final investment decision in next year's first half without securing more sales.Santos' Gladstone LNG (GLNG) project moves ahead of nearest competitor BG Group, which last month signed a 20-year export deal with China National Offshore Oil Corp for 3.6 million tonnes of LNG, but is yet to submit an environmental impact statement."I think the announcement once again represents that GLNG's in a great position," Mr Knox said. "We are in a leadership position in the CSG-to-LNG space."The Santos chief refused to disclose the price at which the LNG was sold to Petronas and rejected suggestions that the sale to its 40 per cent joint venture partner indicated a lack of interest in the product."Petronas is not the only show in town and Petronas moved very quickly on this because they knew that," he said. "They realise that there are a number of other buyers out there who are also seeking to purchase from us and what they decided to do is put their foot on the gas early and do it in a big way. This is very much an arm's-length deal and at a very, very competitive price."Deutsche Bank said the Gladstone LNG project was now the sector leader.Santos shares rose 3.5 per cent, gaining 51 to $14.70.
© 2009 The Age
