Santos to Book $1bn Impairment Charge on its GLNG Project

Santos on Monday said it will book an impairment charge in its GLNG project of approximately $1 billion in its 2016 half-year accounts.

“Sustained low oil prices continue to constrain capital expenditure and impact GLNG,” the company said. During the course of 2016 there has been a slower ramp up of GLNG equity gas production and an increase in the price of third party gas. This has caused Santos to adjust its upstream gas supply and third party gas pricing assumptions for GLNG.

Santos Chairman Peter Coates AO said: “The expected impairment charge for GLNG is clearly disappointing but it is a consequence of the challenging environment which we now face. We have decided to adjust our long-term operating assumptions for GLNG to reflect the reality of the current oil price environment.”

Santos will announce its first half results on August 19.

“However, we firmly believe in the strong long-term growth of LNG consumption and demand globally. GLNG will continue to be an important part of our LNG portfolio and a key supplier of LNG to the Asian market,” Coates said.

Santos GLNG is led by Santos, in partnership with PETRONAS from Malaysia, Total from France, and KOGAS from South Korea. When fully operational, Santos GLNG will have the capacity to produce 7.8 million tonnes of LNG each year.