Thursday, May 29, 2008

Santos ‘close to sale of LNG stake’

Australia's third largest oil and gas producer Santos is in the final stages of talks to sell part of its equity interest in the Gladstone liquefied natural gas project in Australia.

"Santos is currently in the final stages of agreeing and executing a sell-down of part of its equity interest in the Gladstone LNG project, which may have a material impact on the price of the securities of Santos," it said. Santos is planning to build a liquefied natural gas plant at Australia's Gladstone port, which lies in the north-eastern state of Queensland. The proposed plant, estimated to cost A$7.7 billion ($7.4 billion) will have a annual capacity of between 3 million and 4 million tonnes. Industry sources have said that Santos, which plans to operate the LNG facility alone, was expected to sell about a 30% to 40% stake in the project to an energy giant that already has expertise in LNG. The race to build LNG plants on Australia's east coast has stepped up after UK gas producer BG Group last month made a $12 billion takeover bid for Australian energy retailer Origin Energy, which holds the largest CBM resources in Queensland state. Santos, which also has a stake in a proposed ExxonMobil-led LNG project in Papua New Guinea and a share in an operating LNG plant in northern Australia, has been seeking to expand its LNG business in a bid to gain from rising prices and a forecast surge in global demand.
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