The signing was followed by news that the first gas has entered the Bayu Undan-to- Darwin pipeline, where it will be stored until required by the project’s Darwin-based LNG plant.

It will take about a week to fill the pipeline, with gas being introduced at a reduced pressure.

The onshore LNG plant at Wickham point is about 83% complete, according to the Northern Territory government and is due to start operating early next year.

The sales agreement governs the sale of all of the project’s LNG production to Japanese customers, Tokyo Electric and Tokyo Gas. It was signed by Darwin LNG Pty Ltd, the company representing the Bayu Undan partners, which include ConocoPhillips, ENI, Santos Group, INPEX and Tokyo Electric/Tokyo Gas.

Located 500 kilometres offshore from Darwin, Bayu Undan contains estimated recoverable hydrocarbons of 400 million barrels of petroleum (liquefied petroleum gas and condensate) and 3.4 trillion cubic feet of natural gas.

Production commenced in the first quarter of 2004 from the first stage gas recycle (liquids) project which involved stripping natural gas liquids (condensate and LPG) from the field’s gas stream.

The residual gas from the liquids project was then reinjected into the gas reservoir via dedicated wells for future use in the second stage LNG project.

The field is presently producing over 1 billion cubic feet per day of raw gas from which around 108,000 barrels per day of combined condensate and LPG are being recovered.

The LNG project involves the transportation of dry gas via a sub-sea pipeline to Wickham Point, Darwin for processing into LNG for export to Japan.

The project is Santos’ first entry into the international LNG market and, at its peak, will add more than 6 million barrels of oil equivalent to the company’s annual production.

Interests in the total Bayu Undan project are: ConocoPhillips (operator) 56.72%, ENI 12.04%, Santos Group 10.64%, INPEX 10.52% and Tokyo Electric/Tokyo Gas 10.08%.