Santos plant’s French connection

FRENCH energy giant GDF SUEZ, formerly Gaz de France, is expected to beef up its presence in Perth following a $US370 million-plus deal with Santos to develop floating LNG facilities off the state's far north coast.

Santos this week announced it would sell a 60 per cent interest in its stranded Petrel, Tern and Frigate gas fields, 250 kilometres west of Darwin, in the Timor Sea to GDF for an upfront payment of $US200 million.

GDF will then free-carry Santos through completion of front-end engineering and design work for a 2 million tonnes per annum floating LNG development at the fields, and pay Santos a further $US170 million once a final investment decision is made.

Although total development costs are not yet known, they are likely to be comparable with the $US5 billion price tag of Shell's rival floating LNG proposal for its Prelude field further to the west in the Browse Basin.

GDF is expected to manage the project from Perth, where it has already established a presence through water infrastructure subsidiary Degremont, the builder and operator of the Kwinana desalination plant.

The deal will also enhance Santos' prospects of commercialising other stranded gas assets in the offshore Bonaparte Basin.

GDF is Europe's largest buyer of natural gas and the world's third largest buyer of LNG, with its own fleet of 20 LNG carriers and LNG receiving terminals in Europe and the US.

It is also a partner in three major LNG production projects.

Santos chief executive David Knox said GDF SUEZ was an ideal partner to help commercialise its stranded gas assets off northern Australia and boost its presence in the local LNG sector.

"This is an excellent cash and carry outcome for Santos," Mr Knox said in a statement.

"Further value creation potential exists in Santos' other Bonaparte Basin assets, namely the Evans Shoal, Barossa and Caldita fields (and) we will now turn our attention to commercialisation options for these assets."

GDF SUEZ chief executive Gérard Mestrallet said the deal was an important part of its global growth strategy.

"The partnership and Bonaparte Basin development is a key priority for GDF SUEZ globally," he said.

"By extending our reach to the Asian market, it allows us to offer a truly global LNG marketing platform to our customers."

GDF will pay the initial $US200 million to Santos in three tranches by January 2010 and assume operatorship in 2011.