A new agreement between Santos, ConocoPhillips and major Korean energy company, SK E&S,  will advance the development of gas discoveries in the Timor Sea. The agreement will see the progression of the development of the Caldita and Barossa gas discoveries.

 

Santos Vice President Western Australia and Northern Territory John Anderson said various development concepts for Caldita Barossa would be assessed during pre-FEED.

 

“We will look at the option of floating LNG as well as the possibility of a tie-back development to our existing LNG plant at Darwin, either as an expansion of those facilities, the back-filling of Bayu Undan when it comes off plateau or a combination of both,” he said.

 

The terms of the agreement are as follows:

  • SK will earn a 37.5% interest in Caldita and Barossa through a proportionate reduction by Santos and ConocoPhillips.  ConocoPhillips will remain operator of both permits.
  • SK will fund the first US$260 million of a three-well appraisal program, expected to begin in 2013.  Following completion of the appraisal program, SK will have the option to increase its interest to 49.5% in exchange for a further payment of US$60 million to Santos and ConocoPhillips, shared according to their original interests in the permits.
  • SK will fund up to US$90 million of pre-Front End Engineering and Design (pre-FEED) and FEED activities, expected to begin in 2014.
  • SK will make FID and first LNG cargo payments of up to US$110 million to Santos and ConocoPhillips upon meeting certain milestones.