Australia ups energy ante: LNG project ready for start-up, FPSO weeks away from first gas

Australian energy player Santos has shed light on the progress made in bringing its oil, gas, and liquefied natural gas (LNG) projects to life, with one project reaching the stage where all the pieces are in place to come online, another is fast approaching the same level, and the third one in Alaska is moving its first oil timeline forward to hit this milestone sooner than anticipated.

Santos, which recently revealed a multi-week extension of the deadline regarding negotiations surrounding an $18.7 billion non-binding indicative offer for all its shares, which was received from a consortium spearheaded by XRG, a subsidiary of Abu Dhabi National Oil Company (ADNOC), is continuing to make progress in executing its planned development projects.

While showcasing its progress, the firm highlights the accelerated first oil guidance for the Pikka phase 1 project to the first quarter of 2026, Darwin LNG achieving readiness for start-up, and the first gas from the Barossa project’s floating production, storage, and offloading (FPSO) BW Opal reaching a stage where it is considered imminent.

According to the Australian player, the additional production and cash flows from Barossa LNG and Pikka phase 1 are expected to underpin stronger shareholder returns into the future. As the Pikka phase 1 seawater treatment plant and all production modules are on location, Santos claims that the first oil guidance has been accelerated to the first quarter of 2026.

Kevin Gallagher, Santos’ Managing Director and Chief Executive Officer, commented: “Barossa LNG together with Pikka phase 1, are expected to deliver a ~30 per cent increase in production by 2027. Our LNG marketing business continues to perform well with strong average realised prices and tier one customers, including, most recently QatarEnergy Trading LLC.

“The commercial flexibility of our LNG portfolio has provided opportunities to take advantage of market conditions and further optimise the portfolio. Santos’ equity LNG portfolio is about 90 per cent contracted over the next five years, with strong pricing driven by the high heating value of our LNG, our reliability and proximity to growing Asian markets.”

Gallagher emphasizes that the Pikka Phase 1 project is making “strong progress,” with 21 wells drilled, the seawater treatment plant, fabricated in Batam, Indonesia, now on location in Alaska, and key processing modules already at Oliktok Point, having arrived from the Hay River Marine Terminal.

“Barossa LNG is more than 98 per cent complete and first gas is expected imminently. The Darwin LNG plant has reached RFSU and the Barossa FPSO is expected to meet its RFSU milestone within weeks,” added Gallagher.

The Barossa LNG project is a joint venture between Santos (50%), SK E&S (32.5%), and JERA (12.5%). While condensate will be exported via tankers, natural gas will be transported via the Gas Export Pipeline (GEP) to the Darwin LNG plant, which will be tied into the existing Bayu-Undan pipeline.

Based on the available data, the 262-kilometer GEP, the 123-kilometer Darwin Pipeline Duplication, and the subsea infrastructure required for first gas are all in place. The feed gas from Barossa is expected to enable Darwin LNG’s new lease on life, representing its life extension.

Australia is not only working on ensuring energy security but also pursuing decarbonization. With this in mind, the Asia Natural Gas and Energy Association (ANGEA) recently spotlighted the benefits Australia’s domestic carbon capture and storage (CCS) industry can bring to the Asia Pacific’s energy transition journey, if the country’s regulatory and policy settings are handled properly.

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