Japan's Jera to Buy 12.5% Stake in Oz Barossa Project

Australia’s Santos has signed a letter of intent (LOI) to sell a 12.5% interest in Barossa project to Japanese Jera, it said April 16 in a statement.

Santos CEO Kevin Gallagher said signing the LOI with Jera further builds partner alignment and follows the recent agreement to sell a 25% interest in Darwin LNG to SK E&S. Jera already has a 6.1% interest in Darwin LNG.

"Santos continues to build alignment between the Darwin LNG and Barossa joint ventures. Following completion of the ConocoPhillips acquisition and the sell-downs to Jera and SK E&S, Santos will hold a 43.4% interest in Darwin LNG and a 50% interest in Barossa,” Gallagher said. “We are continuing to advance discussions with other parties for the sale of further equity in the Barossa project in line with our previously stated target ownership level of around 40% to achieve increased partner alignment and prudent future allocation of growth capital. We are also in discussions with buyers for Barossa volumes."

Santos last month deferred the investment decision on the Barossa project owing to the uncertain economic impact of Covid-19 and lower oil prices. The Barossa field sits within Santos' northern Australia portfolio, one of the company's core long-life, natural gas asset regions. The project area encompasses petroleum permit NT/RL5 located offshore Northern Territory. 

"Barossa remains an important project for Santos due to its brownfield nature and low cost of supply, and we will continue to use this time to achieve alignment and seek to further strengthen the economics of the project," Gallagher said.

The sale of the 12.5% interest in Barossa to Jera is subject to the negotiation and execution of a binding sale and purchase agreement, completion by Santos of the acquisition of ConocoPhillips' northern Australia and Timor-Leste portfolio as announced in October 2019, third-party consents, regulatory approvals and a final investment decision on Barossa.