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Santos and its joint venture partners have made a Final Investment Decision (FID) regarding the development of the Barossa Gas Field, located about 300km north of Darwin.

Barossa FID also kick-starts the US$600 million investment in the Darwin LNG life extension and pipeline tie-in projects, which will extend the facility life for around 20 years. The Santos-operated Darwin LNG plant has the capacity to produce approximately 3.7 million tonnes of LNG per annum.

Barossa is one of the lowest cost, new LNG supply projects in the world and will give Santos and Darwin LNG a competitive advantage in a tightening global LNG market. The project represents the biggest investment in Australia’s oil and gas sector since 2012.

Santos Managing Director and Chief Executive Officer Kevin Gallagher said FID on Barossa was consistent with Santos’ strategy for disciplined growth utilising existing infrastructure around the company’s core assets.

“Our strategy to grow around our five core asset hubs has not changed since 2016. As we enter this next growth phase, we will remain disciplined in managing our major project costs, consistent with our low-cost operating model,” Mr Gallagher said.

“As the economy re-emerges from the COVID-19 lockdowns, these job-creating and sustaining projects are critical for Australia, also unlocking new business opportunities and export income for the nation. The Barossa and Darwin life extension projects are good for the economy and good for local jobs and business opportunities in the Northern Territory.

“Barossa and Darwin LNG life extension will create 600 jobs throughout the construction phase and secure 350 jobs for the next 20 years of production at the Darwin LNG facility.

The Barossa development will comprise a Floating Production, Storage and Offloading (FPSO) vessel, subsea production wells, supporting subsea infrastructure and a gas export pipeline tied into the existing Bayu-Undan to Darwin LNG pipeline. First gas production is targeted for the first half of 2025. 

Federal Minister for Resources, Water and Northern Australia, Keith Pitt, said, “The final investment decision for the Barossa project is a tremendous show of confidence in the long-term future of Australia’s resource sector.

“It is also a great sign that oil and gas market conditions have improved.

“I want to congratulate everyone involved in the project, including Kevin Gallagher, everyone at Santos and in the joint venture in making this decision.  

“Progress on the Barossa project means new investment, economic growth and development in the Northern Territory, and for Australia.

“As the Minister for Northern Australia, the undertaking provided by Santos that operational staff will be based in the Northern Territory is especially welcomed – ensuring that more of the benefits flowing from the project are captured here in the Territory.” 

Senator for the Northern Territory, Dr Sam McMahon, said the project would be a major economic boost to the Territory and provide much needed jobs.

“The announcement of the development of this field, with gas and particularly condensates so close to Darwin, will provide opportunities for us to capitalise on value adding with new industries,” Dr McMahon said.

“The NT is uniquely placed to develop a thriving petrochemical industry, amongst others, on the back of this announcement. 

“It comes at a time when the NT couldn’t need it more, our economy was in tatters before COVID and we desperately need business and industry to get us back on track.”

The world-class Barossa field contains over 4.5 trillion cubic feet of recoverable gas resources and nearly 50 million barrels of condensate. This field will provide backfill gas for the Darwin LNG facility at Wickham point, ensuring that Darwin LNG remains operational for the next 15-20 years.

“Barossa will support Australia’s gas-fired economic recovery ensuring Darwin’s future as a gas-based processing and industry hub,” Mr Pitt said.

Recently, Santos awarded the Barossa Floating Production, Storage and Offtake facility contract to BW Offshore, ticking off the final milestone ahead of Barossa FID. 

The Northern Territory Chief Minister, Michael Gunner, said, “Today’s announcement shows a strong confidence in investing in the Territory, and in Territory jobs. 

“Territorians working on this project will have job security for the next two decades, while hundreds of new positions will also open up along the way.  

“The Territory Labor Government is delivering to make the Territory a world-class hub for gas production and manufacturing services, which is cementing our position as Australia’s comeback capital.”

Santos and its joint venture partners are targeting Barossa to begin production in 2025. In the meantime, Santos will continue developing the mature Bayu-Undan field and commence infill drilling later this year to extend field life and maintain production.

Northern Territory Minister for Mining and Industry, Nicole Mansion, said, “We remain focused on creating jobs, and making the Territory the very best place to do business.

“Private investment is so important for our comeback from the Coronavirus crisis, and we will continue to support this sector, which creates opportunities and jobs for Territorians.”

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