Gladstone LNG

Location

Gladstone, Queensland

Participants

Santos - 60% (operator)

PETRONAS - 40%

First Production

A final investment decision should be made by the first half of 2010 to enable first cargoes to be exported in early 2014.  

Overview of Project

The proposed multibillion-dollar Gladstone LNG project is for a 3-4 million tonnes per annum LNG processing train and associated infrastructure.

Extensive feasibility and site selection studies have been carried out over the past 18 months, which have culminated in an agreement with the Port of Gladstone Authority for Santos to secure a site to construct a LNG export facility on Curtis Island. 

Key parameters for the proposed facility are:

• A single processing train of approximately 3-4 million tonnes per annum of LNG.
• Multibillion-dollar project, including upstream field development, liquefaction plant and associated infrastructure. Half of the investment is expected to be in the Gladstone plant, with the other half in regional Queensland’s Bowen and Surat Basins.
• Final Investment Decision by first half of 2010 to enable first cargoes to be exported in early 2014.
• Gas supply of 170-220 petajoules per annum sourced from Santos’ coal seam gas (CSG) fields in Queensland’s Bowen and Surat Basins.

Santos has a significant investment in CSG and produces approximately 25% of Australia’s CSG. In 2007 Santos will invest approximately $150 million in expanding its CSG business. In addition, subject to Gladstone LNG project progress and Santos Board approvals, the company expects to invest a further $200 million to progress the project during 2008.

Current Status

Since announcing Santos’ intention to develop an LNG project at Gladstone in July 2007, rapid progress has been made. The project has achieved a number of important milestones during 2008, including the commencement of dual pre-FEED studies conducted by Foster Wheeler and Bechtel, and the lodgement of environmental applications.

On 29 May 2008 Santos announced it had selected PETRONAS, one of the world’s largest LNG producers, to be its 40% partner in the development, operation and marketing of the company’s proposed Gladstone LNG (GLNGTM) project.

PETRONAS will make an initial cash investment of US$2.008 billion, plus a further payment of US$500 million upon reaching a Final Investment Decision for a second LNG train.

The agreement fully aligns the interests of both companies across all strategic elements of the value chain from resources to plant development and operation, and LNG marketing. 

Santos and PETRONAS will form a 60/40 joint venture company to:

• Develop and operate the 450 km gas pipeline to Gladstone;
• Develop and operate the LNG liquefaction plant on Curtis Island at Gladstone with initial capacity of 3mtpa. Technical expertise will be provided by PETRONAS; and
• Undertake all marketing activity, accessing PETRONAS’ well-established customer base in the three largest Asian LNG markets of Japan, Korea and Taiwan.

June 2009 Santos announced a binding Heads of Agreement to sell 2 million tonnes per annum (mtpa) of liquefied natural gas to PETRONAS with an option for an additional 1mtpa.  The Agreement is conditional only upon the GLNG project reaching a final investment decision.

The Agreement covers the sale and delivery of LNG to PETRONAS for a period of 20 years beginning in 2014.  The LNG will be utilised in the Malaysian domestic gas market.

The Agreement provides for the firm sale of 2mtpa.  Additionally, PETRONAS has undertaken to buy a further 1mtpa on the same terms should GLNG elect to supply.  While the commercial terms and price are confidential, they are in line with recent industry practice for long term contracts.  

Following the submission of GLNG's draft Environmental Impact Statement (EIS) on 30 March 2009, the EIS has gone through an extensive public consultation process which concluded o 17 August 2009.  Over 30 consultation sessions were held with 40 formal submissions made to the Queensland Government.

Visit the GLNG website.