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Santos today announced that the PNG LNG project is proceeding with full project execution, with the completion of sales and purchase agreements with LNG buyers and financing arrangements with lenders.

PNG LNG will see Santos and its partners build gas production, processing, transportation and liquefaction facilities capable of producing 6.6 million tonnes of LNG per annum. The project will cost an estimated US$15 billion to construct. Santos’ share of the estimated capital cost is US$2 billion.

Funding for the project will come from a joint financing at market rates led on behalf of the co-venturers by ExxonMobil with export credit agencies and commercial sources together with contributions by each of the co-venturers.

All of the PNG LNG project’s production capacity has been committed on a long-term basis with four major customers in the Asia Pacific region: CPC Corporation, Taiwan; Osaka Gas Company Limited; The Tokyo Electric Power Company Inc.; and Unipec Asia Company Limited, a subsidiary of China Petroleum and Chemical Corporation (Sinopec). First LNG deliveries are scheduled to begin in 2014.

Santos Chief Executive Officer, David Knox said completion of financial close leading to full project execution at PNG LNG is a significant step forward in the company’s LNG growth strategy.

“PNG LNG will provide Santos with long-term production and cash flows – our share of project production is expected to be approximately 9 million barrels of oil equivalent per annum at plateau including LNG and associated liquids.”

“I appreciate the strong commitment of the Government of Papua New Guinea, the PNG landowners, our operator ExxonMobil, our project lenders and our customers to make this project a reality.”

About PNG LNG

The PNG LNG Project is an integrated development that includes gas production and processing facilities, onshore and offshore pipelines and LNG plant facilities with a capacity of 6.6 million tonnes per annum. Santos has a 13.5% interest in PNG LNG. Other participants are entities of ExxonMobil (33.2% and operator), Oil Search (29%), Independent Public Business Corporation (PNG Government, 16.6%), Nippon Oil Exploration (4.7%), Mineral Resources Development Company (PNG landowners, 2.8%) and Petromin PNG Holdings Limited (0.2%).