By David Winning and Min-Jeong Lee
SYDNEY--Santos Ltd. (STO.AU) and ConocoPhillips (COP) have agreed a deal worth up to US$520 million to sell a minority stake in the Caldita and Barossa gas discoveries offshore Australia to SK E&S, an unlisted gas unit of South Korea's SK Group.
The deal involves SK E&S purchasing a 37.5% interest in the two fields in the Timor Sea, with an option to buy an additional 12% stake following the drilling of three appraisal wells.
It means Santos and ConocoPhillips will reduce their stakes initially to 25% and 37.5%, respectively.
In a statement Thursday, Santos said the project partners expect to begin front-end engineering and design, or FEED, work in 2014. This planning work is important because it enables companies to get a clearer view on how much projects will cost to build and whether they will be feasible.
"We will look at the option of floating LNG as well as the possibility of a tie-back development to our existing LNG plant at Darwin, either as an expansion of those facilities, the back-filling of Bayu Undan when it comes off plateau or a combination of both," said John Anderson, Santos's vice president for Northern Territory and state of Western Australia.
SK Group plans to use any liquefied natural gas from the fields for domestic use, as South Korea completely relies on imports for its LNG requirements.
SK Group has been continuously expanding its investment in overseas resource development projects as the energy-deficient Asian country struggles to enhance its ability to meet its own needs.
It expects to spend an around KRW2 trillion (US$1.7 billion) on resource development projects this year, with potential destinations including Southeast Asia, Central Asia and Central and South America.
Write to David Winning at firstname.lastname@example.org and Min-Jeong Lee at email@example.com
(END) Dow Jones Newswires
June 07, 2012 00:21 ET (04:21 GMT)
Copyright (c) 2012 Dow Jones & Company, Inc.