News on the upside.... Santos forecast to reach record GLNG...

News on the upside....

Santos forecast to reach record GLNG production

Santos shares are closing in on a six-month high as its flagship gas project in Queensland is tipped to hit record production levels this week.

Macquarie Wealth Management data predicts the two production units at Santos's Gladstone LNG project will reach a record run-rate of about 9 million tonnes a year.


This is a massive turnaround for the operation, which underwent a 28-day scheduled outage for the main GLNG train in the September quarter.

The record production rate was being driven by the two-train shutdown at Shell's QCLNG joint venture, which "implies both [Origin Energy's Australia Pacific LNG] APLNG and GLNG will be running well above nameplate [capacity]," the research says.

GLNG's output of 9 million tonnes a year would be well above Santos' Papua New Guinea LNG operations, which is already operating above nameplate capacity and reached an annualised rate of 8.6 million tonnes in June.

The increased production, with the likelihood of oil prices hovering above $US50 a barrel, could see Santos pay down its net debt of $US2 billion ($2.56 billion) by early 2019, almost a year ahead of target.

It comes as the three LNG ventures in Queensland have reached an agreement with the federal government to fill a forecast gap in domestic supply for 2018 and 2019, and a guarantee to offer excess gas produced above contracts to domestic users first, before shipping it to the Asian spot LNG market