Santos has commenced loading the first liquefied natural gas cargo from its Barossa project offshore Australia, following a delay of approximately two months. The delay was caused by technical problems requiring a campaign to strengthen pipework connections on the BW Opal floating production, storage and offloading vessel. While describing the delay as disappointing, the company's stated aim was to rectify vulnerabilities to ensure long-term, high-reliability operation.

Barossa Project Status and Details

The Barossa gas field is backfilling the two-decade-old Darwin LNG plant, replacing volumes from the depleted Bayu-Undan field. The six-well drilling campaign has been successfully completed, with all wells intersecting excellent reservoir quality and demonstrating high potential deliverability. Gas export volumes have ramped up to around 450 million cubic feet per day, representing about 75% of plant capacity. The first LNG cargo, sold on a delivered ex-ship basis, is destined for the Sakai terminal in Japan.

Pikka Phase 1 Project Update

Concurrently, Santos' Pikka Phase 1 oil project in Alaska, USA, is 98% complete and nearing mechanical completion. While on track for first oil by late in the first quarter of 2026, Phase 1 capital expenditure for Santos' 51% share has increased by around $200 million. This increase is attributed to inflationary pressures on labour and materials, tariffs, and logistics costs, but represents less than 10% of total project costs. Drilling is advanced, with one well flowing at an initial rate of approximately 8,000 barrels per day.

Strategic Outlook and Financial Framework

The combined contribution from the Barossa LNG and Pikka Phase 1 projects is expected to increase Santos' production by 25% to 30% by 2027 compared to 2024 levels. The company emphasizes a disciplined, low-cost operating model and a capital allocation framework supported by an all-in free cashflow breakeven target of $45 to $50 per barrel, aiming to deliver sustainable results and strong shareholder returns.