Santos in `Final Stages' of Talks to Sell LNG Project Stake; Halts Shares

Santos Ltd. said it is in the “final stages” of closing an agreement to sell a stake in its $15 billion liquefied natural gas project in Australia.

Shares in Australia’s third-largest oil and gas producer have been halted until the company announces a deal or the market opens Sept. 13, Santos said in a statement today. Korea Gas Corp., the world’s biggest LNG importer, has said that it is in discussions to buy an interest in the Gladstone project to obtain stable supplies of the cleaner-burning fuel.

Santos aims to sell at least 15 percent of the venture before committing to the first phase later this year, the Adelaide-based company said Aug. 26. Santos, which owns 60 percent of the project, said it plans to remain the largest stakeholder. Partner Petroliam Nasional Bhd. has 40 percent.

BG Group Plc, Origin Energy Ltd. and Royal Dutch Shell Plc are also planning projects in Queensland state to convert coal- seam gas to liquid for export to Asia.

Korea Gas is close to an agreement to buy a 10 percent stake in the Santos venture for $1.5 billion, Yonhap News said Aug. 27, citing a company official it didn’t identify.

The project, with two units, may cost A$16.4 billion, Melbourne-based Deutsche Bank analyst John Hirjee has estimated. Santos may seek to raise as much as A$2.5 billion selling shares, Adrian Wood, an analyst at Macquarie Group Ltd., said Aug. 27.

Santos shares closed yesterday at A$13.75, down 0.6 percent in Sydney trading. Santos has fallen 2.4 percent this year, compared with a 6.9 percent loss for the S&P/ASX 200 Index.

To contact the reporter on this story: James Paton in Sydney jpaton4@bloomberg.net.

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