Japanese utility Jera has agreed binding terms with Santos to acquire a 12.5% interest in the US$3.6 billion Barossa offshore gas project in Australia.

The two companies had agreed in principle in April 2020 that Jera would buy the interest from Santos.

Santos said on 8 December 2021 the effective date of the sale of its Barossa interest is 31 March 2020 and completion is expected in the first half of 2022.

Jera will reimburse Santos for its share of capital expenditure on the project from the effective date to completion, expected to be US$300 million.

Jera is an existing partner in the Darwin LNG facility with a 6.1% interest. The Barossa project will provide feedstock gas to the Darwin LNG facility.

A final investment decision was taken in March 2021 and the project is aiming for first LNG in the first half of 2025.

Post completion, the Barossa joint venture will be Santos (50%), SK E&S (37.5%) and Jera (12.5%).

The Darwin LNG owbers are Santos (43.4%), SK E&S (25%), Inpex(11.4%), Eni (11%), Jera (6.1%) and Tokyo Gas (3.1%).

Santos chief executive Kevin Gallagher said: “Jera is a long-standing partner and customer at Darwin LNG. We are delighted to have finalised our agreement with Jera consistent with the terms of the Letter of Intent that was agreed shortly after the announcement of the acquisition of ConocoPhillips’ interests in Barossa.”

Jera corporate vice president and managing executive officer Yukio Kani said Barossa was a good LNG investment in Australia.

“Jera is keen to partner with quality Australian and international partners like Santos and SK E&S, and our investment decision-making processes reflect decades of experience in the international LNG market,” he said.

“Barossa works well as part of our strategy to secure ongoing and reliable LNG supplies and the agreement reflected the ongoing global importance of LNG as a transitional fuel.

"In addition, Jera will also work with its partners to study the development of zero-emission projects and to evaluate CCS projects. Through these initiatives, Jera will evaluate opportunities for the reduction of CO2 emissions from the Barossa project with the partners.”

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