Santos has signed a Letter of Intent (LOI) to sell a 12.5 per cent interest in Barossa to JERA which already has a 6.1 per cent interest in Darwin LNG.

Santos’ signing of the LOI with JERA advances partner alignment between the Darwin LNG and Barossa joint ventures for the development of Barossa as backfill for Darwin LNG.

Santos Managing Director and Chief Executive Officer Kevin Gallagher said signing the LOI with JERA follows the recent agreement to sell a 25 per cent interest in Darwin LNG to SK E&S.

“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 per cent interest in Darwin LNG and a 50 per cent interest in Barossa.

Mr Gallagher said they continue to advance discussions with other parties for the sale of further equity in the Barossa project.

“[This is] in line with a previously stated target ownership level of around 40 per cent to achieve increased partner alignment and prudent future allocation of growth capital. We are also in discussions with buyers for Barossa volumes.”

However, Mr Gallagher said that as per the announcement on 23 March, given the uncertain economic impact of COVID-19 combined with lower oil prices, Santos expects to defer FID on Barossa until business conditions improve.

“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,” Mr Gallagher said.

The sale of the 12.5 per cent 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 on 14 October 2019, third-party consents, regulatory approvals and a final investment decision on Barossa.