Previous indications of foot-dragging by Santos and GDF Suez over their plans for a Floating LNG (FLNG) solution for the Bonaparte project offshore Australia have proven correct, with the companies now turning to consider other options.
Partner Santos (40%) and operator GDF Suez (60%) confirmed the Bonaparte LNG project will consider “other potential development options in addition to the floating LNG concept” to develop the Petrel, Tern and Frigate gas fields. The trio of discoveries are located 250 km offshore Darwin. These options will include a pipeline connection to Darwin, which itself by no means would be a cheap option.
The statement from Santos and GDF said that while the partners “firmly believe the fields have material value, having been fully appraised, their future development using floating LNG technology, although technically robust as demonstrated during extensive pre-FEED studies, does not currently meet the companies’ commercial requirements”.
Consequently, they added, the proposed Bonaparte FLNG project will not be taken into the FEED phase at this point in time.
While this means that they are not completing writing off the FLNG option, the announcement is likely to mean exactly that.
Santos received a cash consideration of US $200 million when the Bonaparte LNG joint venture was formed, and has received a full carry on study and development costs by GDF Suez so far. However, with Australia’s substantial labour costs and the rising costs of offshore mega-projects generally, a subsea-to-shore option could be considered a more manageable project in terms of costs.
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