AUSTRALIA – American multinational energy corporation ConocoPhillips has agreed to sell its northern Australian business to partner Santos Ltd for $1.39 billion, in a deal that will hike the Australian group’s output by 25% and boost its position in the global gas market.
Reuters reported that the deal marks the second major acquisition by Santos in less than a year, following a sharp turnaround in its fortunes under Managing Director Kevin Gallagher.
“While we believe the Darwin LNG backfill project remains among the lower cost of supply options for new global LNG supply, this transaction allows us to allocate capital to other projects,” ConocoPhillips Chief Operating Officer Matt Fox said in a statement.
“The big prize here is pushing forward with development (of Barossa) and setting up the framework to develop other resources in the region over time,” Gallagher told reporters on a conference call.
The deal gives Santos control over the future of Darwin LNG, the second oldest of Australia’s 10 LNG plants, at a time when it is vying against several LNG projects worldwide to line up gas buyers to extend its life.
Santos however said that it aims to cut down its stakes in Darwin LNG and Barossa to about 40%-50% and that it has already reached a preliminary agreement to sell down a 25% stake in Darwin LNG to its Barossa partner SK E&S of South Korea.