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Santos (STO) and GDF SUEZ, one of the world’s leading LNG companies, today announced a milestone partnership to develop a floating LNG project in the Bonaparte Basin, Australia (Bonaparte LNG). Bonaparte LNG aligns the interests of both companies across the full value chain, from gas field resources to plant development and downstream. GDF SUEZ and Santos will form a 60/40 unincorporated joint venture to be led by GDF SUEZ to: develop and operate a proposed floating liquefaction plant with a planned capacity of 2mtpa of LNG which will utilise the gas from the Petrel, Tern and Frigate natural gas fields and; GDF SUEZ to lift all the LNG production and to ship it to markets in the Asia-Pacific region in accordance with terms agreed by the joint venture. The joint venture combines Santos’ upstream expertise and GDF SUEZ’ technical leadership in floating LNG.

For Santos, the transaction amounts to a total consideration of up to US$370 million for contingent resources structured as a cash consideration of US$200 million; a contingent consideration of US$170 million to be paid upon Final Investment Decision (FID) to develop the assets. GDF SUEZ will also fully carry Santos’ share of pre-FEED and FEED development costs for the floating LNG project and Santos’ share of the upstream pre-FEED and FEED development costs for the Petrel, Tern and Frigate offshore gas fields, which includes two appraisal wells. Santos will also retain significant upside value from its 40% interest in the Bonaparte LNG project. Bonaparte LNG is a significant outcome arising from Santos’ ongoing review of commercialization options for its substantial gas assets in the Bonaparte Basin and represents the asset monetization process. The transaction covers approximately 30% of Santos’ total Bonaparte Basin contingent resources (comprising the Petrel, Tern, Frigate, Evans Shoal, Barossa and Caldita gas fields). Based on the US$200 million upfront payment, Santos will book a profit on sale of approximately A$160 million after tax in the second half of 2009. Bonaparte LNG will provide GDF SUEZ a major opportunity to increase its footprint within the upstream and liquefaction sectors of the Asia Pacific market, a premium market sector accounting for two thirds of global LNG demand. The project also serves the Group’s integration objective of driving the development of integrated LNG chains. In this case, E&P and LNG activities work in synergy to develop new LNG resources on a worldwide scale.

Santos Chief Executive Officer David Knox said: “In GDF SUEZ, we have chosen a leader in the gas and LNG industry and a company with the technical capacity to develop a floating LNG project as our partner. We are very pleased to achieve a transaction which delivers US$200 million upfront cash, unlocks 220 mmboe of contingent resource and adds to our growing portfolio of LNG growth projects.” “Further optionality exists in Santos’ other Bonaparte Basin assets, namely the Evans Shoal, Barossa and Caldita fields. We will now consider commercialisation options for these assets”, Mr Knox said.

www.santos.com