LNG (LIQUIFIED NATURAL GAS)

First cargo shipped from GLNG (Video)

THE first cargo from Santos-operated $US18 billion ($A25.2 billion) Gladstone LNG project, the second of Queensland's three new LNG monsters, set sail from Gladstone this morning, bound for South Korea on the Malaysian-owned LNG ship Seri Bakti.

First cargo shipped from GLNG (Video)

In one of his final acts as Santos' managing director, David Knox, who oversaw the company's aggressive LNG strategy, said today was the culmination of a historic journey for Santos.

"This is the largest project we have ever undertaken as a company and I am so proud that we have been able to deliver this on time and within budget," Knox said.

"Successfully delivering our first operated LNG project is a testament to our dedicated employees and contractors, the support we have received from governments, local communities, our customers and shareholders, as well as the strong relationships we enjoy with our joint venture partners.

"The first cargo from GLNG strengthens our position as a major and competitive LNG supplier to Asia.

"GLNG is a robust project and will generate strong cash flows for the business for decades to come."

Project construction began in 2011 and has taken more than 95 million hours from 10,000 workers to date.

The project saw more than $15 billion invested Australia-wide, including $8 billion in Queensland alone.

Production from the first train commenced in September and work on the second train is continuing to progress well, with Train 2 expected to be ready for start-up by the end of the year with first LNG in the second quarter 2016.

It involves CSG field developments in the Surat and Bowen basins, a 420km gas transmission pipeline and a two-train LNG plant on Curtis Island, near Gladstone which will have the capacity to produce 7.8 million tonnes of LNG per year when fully operational.

Santos is the operator and has a 30% interest in the project. Other co-venturers include Malaysia's

(27.5%), France's Total (27.5%) and South Korea's Kogas (15%).

Bechtel, which was the main contractor for all three Queensland plants, also welcomed the cargo.

"Delivering a project the scale of GLNG alone is an extraordinary effort that instils a great level of achievement and pride within our team," Bechtel's LNG business manager Alasdair Cathcart said.

"Successfully delivering the unprecedented scale of projects, side-by-side, simultaneously on Curtis Island, is a testament to the expertise of our team and the level of collaboration with our customers and suppliers,"

Each production train on the GLNG project will produce up to 3.9MMtpa of LNG.

Bechtel is responsible for about 40% of the world's LNG liquefaction capacity currently under construction.

The Australian Petroleum Production and Exploration Association says the start-up of the Curtis Island plant highlights Australia's emergence as a world leader in the global LNG industry despite the global crude oil and LNG price downturn.

APPEA CEO Dr Malcolm Roberts said Australia's enormous natural gas reserves and Asia's thirst for clean and reliable energy have seen an unprecedented level of investment in Australian projects in recent years.

"Fortunately for Australia and the companies involved much of the infrastructure needed to export LNG is either completed or nearing completion," Dr Roberts said.

"While the oil and gas industry faces the same headwinds as other commodities, we are resilient enough to fend off the latest industry challenges.

"The International Energy Agency predicts the world gas market could grow by around 30% by 2030. Other producers are emerging. Our challenge now is to stay competitive."

"Completing one of the biggest infrastructure projects in the world is an extraordinary achievement and all those who worked on Santos GLNG, contractors and service providers are to be congratulated," Dr Roberts said.

Queensland Resources Council CEO Michael Roche said the first cargo was the perfect illustration of the contribution that the resources sector makes to the Queensland and Australian economies

The QRC said the resources sector contributed $64.8 billion in 2014-15 to Queensland's prosperity and the gas industry's share was $22.1 billion, or more than one third of that.

"That translates to $954 million in wages to 5268 direct full-time employees and a flow on benefit that has supported another 109,000 Queensland jobs in 2014-15," Roche said.

"After an unprecedented investment and construction period in the gas industry, Queensland and companies like Santos are now reaping the rewards of the hard slog of the past few years."

"Today is a significant step in the continuing story of Queensland's rise as a major player in the supply of gas to the world, especially Asia.

"Santos has shown extraordinary commitment and investment into a new Queensland industry and has stayed the course with its vision to be a major player.

"They are to be congratulated for their success to date and I look forward to seeing them play a vital role for many years to come in ensuring that Australia becomes a world-leading gas producer."

GLNG is now Australia's fifth operating LNG project, and will support Australia becoming the world's leading LNG producer by 2018.

Another five projects - representing a total investment of more than $160 billion - are progressing towards completion including Queensland's Australia Pacific LNG project which is expected to be commissioned by year's end.

In 2014-15, Australia shipped 25MMtpa of LNG cargoes, earning $16.9 billion in export revenue.

In Queensland alone, almost $1.4 billion worth of LNG has been exported this year.

Having successfully delivered the project Santos has its interest on the market, as part of a major asset sales process it is running to clear some of its hefty $8.8 billion debt load.

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