LNG project to transform Santos’ image

mlipen Business, Main Stories

THE PNG liquefied natural gas (LNG) project alone will transform the earnings quality of Santos Ltd when the project comes online in 2014, chief executive David Knox said.
The final investment decision (FID) reached last Dec 8 by project partners marked the next step in Santos’ transformation in LNG growth strategy, he said in a statement when the company released yesterday its last year’s fourth quarter activities report ending Dec 31.
Santos has 13.5% interest in the PNG LNG project.
“By 2015, Santos’ goal is to have production from Darwin LNG (Australia), PNG LNG, Gladstone LNG (GLNG) and would be constructing Bonaparte LNG,” Mr Knox said.
“This will represent a transformation of the company into a leading Australian and Asian energy company,” he said.
Santos estimates that capital expenditure guidance for this year included A$1 billion (K2 billion) for GLNG; A$500 million (K1.234 billion) for PNG LNG; A$500 million (K1.234 billion) sanctioned projects (Kipper, Reindeer, Henry and Chim Sao); and A$150 million (K370 million) for conventional exploration.
The royalty-related taxation expense guidance assumed an average oil price of A$90 (K222) per barrel this year.
Santos claimed its production of 54.4 million barrels of oil equivalent (mmboe) last year was in line with its guidance range (53-56mmboe) and December quarter production of 13.9mmboe was 2% higher than the same period in 2008 (13.6mmboe) and in line with last September quarter.
“The base business delivered a solid production performance with new production from Oyong in Indonesia and strong production from John Brookes.”
But its sales revenue of A$2.181 billion (K5.384 billion) was 21% lower than 2008 sales revenue of A$2.762 billion (K6.818 billion) due to lower international oil prices.
The December quarter average oil price of A$85.37 (K211) per barrel was 5% lower than a year earlier.
December quarter average gas price of A$3.99 (K10) per gigajoule was 16% lower than the A$4.74 (K11.70) posted during the same period in 2008 due to lower oil prices.