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Santos (ASX:STO) - Managing Director & CEO, Kevin Gallagher
Managing Director & CEO, Kevin Gallagher
Source: The Mercury
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  • Energy giant Santos (STO) will push ahead with plans to develop a multi-billion-dollar gas field north of Darwin
  • The Barossa gas project, worth US$3.6 billion (roughly A$4.71 billion), was put on hold last year amid COVID-19’s impact on the global oil and gas industry
  • Today’s final investment decision also kicks off a US$600 million (around A$785.65 million) spend across pipeline tie-in projects across Darwin
  • The investment is poised to extend the LNG assets’ lifespan by roughly 20 years and create hundreds of construction and production jobs
  • First production from the Barossa facility is slated for the first half of 2025
  • Santos rose a slight 0.42 per cent on the back of today’s news, trading at $7.24 per share

Energy giant Santos (STO) will push ahead with plans to develop a multi-billion-dollar gas field north of Darwin.

The Barossa gas project, situated offshore from the Northern Territory and worth US$3.6 billion (roughly A$4.71 billion), was put on hold last year amid COVID-19’s impact on the global oil and gas industry.

Now, however, as prices begin to rebound and vaccines hit the market, heightened stability has allowed Santos to endeavour with previously-laid plans.

The ASX-200 lister’s Barossa development will include a floating production, storage and offloading vessel, subsea production wells and a gas export pipeline tied to existing infrastructure.

Overall, Santos maintains the new facility will give it a “competitive edge” in a tightening LNG market. Speaking to the investment today, Managing Director and CEO Kevin Gallagher said the development aligned with the energy giant’s growth strategy.

“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,” he stated today.

Today’s final investment decision also kicks off a US$600 million (around A$785.65 million) spend across pipeline tie-in projects across Darwin. The investment is poised to extend the LNG assets’ lifespan by roughly 20 years.

“The Barossa and Darwin life extension projects are good for the
economy and good for local jobs and business opportunities in the Northern Territory,” the Santos CEO continued.

Oil and gas development across Australia’s northern corner is set to have a tangible impact on jobs: the LNG life extension will create 600 openings, while 350 permanent workers are required to maintain the facility over the next 20 years of production.

Today’s announcement comes amid a big morning for the ASX’s energy sector — earlier today, AGL Energy (AGL) announced it would divide its business, splitting its emissions-intensive assets from its wider portfolio.

The move is in step with the ‘green shift’ currently seen across larger corporations, with fellow ASX-200 stalwarts Fortescue Metals (FMG) and Coles (COL) setting carbon neutrality targets for the not-so-distant future.

Today, Santos expressed similar sentiments, inking agreements with SK E&S and Mitsubishi to investigate ways to source carbon-neutral LNG from the Barossa asset. First production from the facility is slated for the first half of 2025.

Santos rose a slight 0.42 per cent on the back of today’s news, trading at $7.24 per share at 10:31 am AEDT. The company has a $15 billion market cap.

STO by the numbers
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