The Barossa project - very close to approval

Since taking over operatorship from Conoco Phillips, Santos have made great progress on their flagship Barossa project. Located 300 km north of Darwin, Barossa is destined to provide much-needed backfill to the DLNG plant, replacing gas from Bayu-Undan.

Santos have been working hard to sanction Barossa by Christmas, but have now announced that Final Investment Decision (FID) will be deferred to 2021. But in this year of COVID restrictions and project deferrals across the globe, that will still represent a major achievement.

The major building blocks required to underpin FID are now all in place. Engineering of the facilities, including the FPSO and subsea equipment, is well underway.  Perhaps more importantly, major commercial agreements are in place, including the tolling agreements for DLNG, and long-term LNG sales agreements.  

The importance of having these key agreements now in place should not be underestimated.  Recent Australian projects have really struggled to achieve commercial alignment, resulting in ongoing delays to major developments.

Execution of the Barossa contracts is a fantastic accomplishment for the Santos team.

So whilst Barossa FID won’t be the industry’s Christmas present, Santos should be very proud of the results they have achieved. And we can look forward to 2021 expecting that a new major project will be approved, providing a multitude of opportunities for suppliers, vendors and contractors.

Jeanette Roberts is an energy industry leader and Non-Executive Director.  She is interested in global energy issues, and their impact on the Asia Pacific region.