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September 9, 2010 3:09 AM EDT
Natural gas producer Santos Ltd revealed on Thursday that it is set to sell 15 percent of its $7.7 billion Gladstone liquefied natural gas (GLNG) project to Total SA for $650 million, giving the giant French company more stakes on the joint venture.
As Malaysian state-owned Petronas already sold its five percent GLNG stakes to Total, the French company would end up with 20 percent stakes in GLNG while Santos and the Malaysian firm will both retain 45 percent and 35 percent of ownership respectively.
Santos chief executive David Knox said that the deal would effectively promote Total as a full joint venture partner in GLNG as he stressed that the project would benefit on the company's entry as "Total brings substantial technical LNG plant and project management expertise with respect to major LNG developments."
Total chairman Christophe de Margerie said that the company decided to partner with Santos for its expertise in Australian gas production while the team up with Petronas was based on its LNG marketing network in Asia.
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On its part, Mr de Margerie said that Total is set to bring to the project "its experience in successfully managing major projects such as the construction of gas liquefaction plants, and its capacity to market LNG to the Asian market."
Meanwhile, Santos also announced that it has closed a deal that would allow the sale of 1.5 million tonnes per annum (MTPA) of LNG to Total for 20 years which will commence in 2014, adding that GLNG and Petronas had agreed to surge contracted volumes to 3.5 MTPA.
The company said that the twin deal would cover the sale of up to 5 MTPA of LNG, worth about $100 billion, which Santos said would be largely used for its two train project as the company added that further collaboration is in the works with Total for the commercialisation of Santos' resources.
Santos said that proceeds from the sale, which is subject for approval of the Australian Foreign Investment Review Board, would be allocated to fund the company's expansion projects, most notably its GLNG project expenditures.
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