Santos, GDF Suez May Add Investor to LNG Project in Australia

Santos Ltd. (STO), Australia’s third-biggest oil producer, said its proposed Bonaparte floating liquefied natural gas venture with GDF Suez SA (GSZ) off the country’s northern coast may bring in another partner.

“There probably is room for another party,” especially as part of talks to sign up customers, Santos Chief Executive Officer David Knox told reporters today in Sydney. The project would probably cost $8 billion to $10 billion, Citigroup Inc. estimated last month.

Santos expects an investment decision on whether to go ahead with Bonaparte in about 2015, Knox said today in a speech. GDF Suez, Europe’s biggest utility by market value, said last September that it expected a decision at the end of 2014.

Santos and Paris-based GDF Suez are among energy companies planning to follow Royal Dutch Shell Plc (RDSA) in developing projects to convert gas into liquid on giant ships off Australia as costs to build onshore plants rise. Woodside Petroleum Ltd. (WPL) said yesterday that floating LNG technology may be the fastest way to develop its Browse project, while Exxon Mobil Corp. last month lodged plans for a sea-based venture off Australia.

Bonaparte LNG, which would be located offshore about 250 kilometers (155 miles) west of Darwin in Australia’s Northern Territory, won federal government approval in October. Adelaide- based Santos, which holds 40 percent of the venture, has said it expects to begin output in about 2018. GDF Suez has 60 percent.

Santos is also building the Gladstone LNG project, one of three coal-seam gas-to-LNG developments under construction on Australia’s east coast. ConocoPhillips (COP) and Origin Energy Ltd. (ORG) are developing a rival project, while BG Group Plc (BG/) is operating another. Shell and PetroChina Co. plan a fourth LNG venture in Queensland state through their Arrow Energy Ltd. venture that hasn’t yet been approved by the companies.

All the LNG developers in Queensland are in talks about how to reduce costs, Knox told reporters. The proposed Arrow project has development options, including working with Santos, he said earlier at a Macquarie Group Ltd. conference.

“We have potential to work together on that and maybe expand onto their site, should they wish to do so, but they do have some choices available,” according to Knox.

To contact the reporters on this story: David Fickling in Sydney at dfickling@bloomberg.net; James Paton in Sydney at jpaton4@bloomberg.net

To contact the editor responsible for this story: Andrew Hobbs at ahobbs4@bloomberg.net

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