Australian liquefied natural gas (LNG) exporter Santos Ltd. saw sales volumes and revenue from the super-chilled fuel drop in 2Q2021 following the sale of a chunk of its ownership in the Darwin LNG plant in the northern part of the country.
Santos said Thursday it logged 1.04 million metric tons (mmt) in LNG sales volumes during the quarter, compared to 1.33 mmt in 1Q2021. However, the most recent quarter’s figures were still higher than in the same period one year ago, when Santos logged 920,500 metric tons in LNG sales volumes.
Australia is a major supplier of LNG to the Asia-Pacific region.
The quarter/quarter drop was mostly due to the completion of the $390 million sale of a 25% stake in the Bayu-Undan offshore gas field and the Darwin LNG facility to South Korea’s SK E&S Co. Ltd. The deal closed at the end of April, leaving Santos with a 43.4% interest in both developments. Santos is operator at both Bayu-Undan and Darwin LNG.
Earlier this year, Santos sanctioned its Barossa project to extend the life of the 3.7 mmt/year (mmty) Darwin LNG facility by 20 years. The offshore Barossa development is meant to supply Darwin once the Bayu-Undan field stops producing. The project remains on track for first gas production in the first half of 2025, Santos said.
The sale also ate into Santos’ overall sales and production figures. The company reported sales volume of 26.4 million boe compared to 27.4 million boe in the previous quarter. In 2Q2020, Santos logged sales volumes of 24.6 million boe.
In terms of production, Santos reported 22.5 million boe overall, compared to 24.8 million boe in 1Q2021 and 20.6 million boe in 2Q2020.
The drop was partially offset by stronger oil and gas production in Western Australia and higher gas production in Queensland, Santos said.
That strong production performance is expected to be reflected in the coming quarters, and the company has narrowed its guidance upward for both production and sales volumes. Santos now is expecting production to reach between 87-91 million boe this year over the previous forecast of 84-91 million boe. Anticipated sales volumes have been revised from 98-105 million boe to 100-105 million boe.
Despite stronger commodity pricing, LNG revenues dropped slightly, from $427 million in 1Q2021 to $421 million in 2Q2021. Second quarter LNG revenues were higher than in the prior-year quarter, when they reached $400 million.
While Santos’ LNG figures dropped, the company reported record quarterly revenue overall because of climbing commodity prices. Santos logged $1.1 billion in sales revenue, compared to $964 million in 1Q2021 and $785 million in 2Q2020.
Santos also said it had made progress on its plans to get to net-zero emissions by 2040, including a scheme to repurpose Bayu-Undan as a hub for carbon capture and storage (CCS) projects once production ceases.
The company in May signed a memorandum of understanding with Italy’s Eni SpA to look into potential projects in northern Australia and Timor-Leste with a targeted capacity of 10 mmty of carbon dioxide.
During the quarter, the company also received A$15 million ($11.1 million) from the Australian government to advance on its Moomba CCS project in South Australia. The development would “safely and permanently store” 1.7 million mmty of CO2, with capacity for up to 20 mmty across the Cooper Basin.
CEO Kevin Gallagher said the company was also actively exploring zero-emissions hydrogen projects at Moomba as well.
“Market development opportunities continue to be explored with domestic and international players to secure off-take arrangements,” the company said of the hydrogen scheme.
Woodside’s LNG Sales Trend Higher
Santos’s LNG results contrasted with those of competitor Woodside Petroleum Ltd., which saw its LNG sales increase slightly compared to the previous quarter.
Woodside reported produced LNG sales volumes of 18 million boe (equivalent to about 2 mmt), up slightly from 17.6 million boe in the first quarter. A year ago, it logged LNG sales volumes of 19.7 million boe.
Woodside also saw its LNG trading business grow, reporting higher quarterly sales of purchased LNG. Second quarter sales volumes of purchased LNG totaled 5.2 million boe in the second quarter compared to 3.4 million boe in the first quarter and 1.3 million boe one year ago.
Like Santos, Woodside also saw overall production drop. Output declined 4% quarter/quarter to 22.7 million boe because of turnaround activities and weather. The figure was also lower compared to 2Q2020, when Woodside logged total production of 25.9 million boe.
However, the decline in the most recent quarter was partially offset by higher output from Pluto LNG, which produced 1.2 mmt during the period. Previously, the facility produced 1.1 mmt in 1Q2021 and roughly 1.2 mmt in 2Q2020.
Despite the lower production, Woodside’s revenues grew 15% quarter/quarter, owing to higher commodity prices. The company reported $1.29 billion in sales revenue for 2Q2021, compared to $1.12 billion in the previous quarter and $805 million in 2Q2020.
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