August 21, 2008

Santos Proposes to Construct 500MW Gas-Fired Power Station in Victoria

Oil and gas company Santos has announced a proposal to construct a nominal 500MW power station near Orford in western Victoria, Australia.

The proposed move into power generation reflects Santos's recognition that natural gas will play an increasingly significant role in Australia's power generation mix.

With an estimated total project cost of A$800 million, the first phase of the proposed combined cycle gas turbine (CCGT) Shaw River power station would be expandable to a three-CCGT nominal 1,500MW plant supplying power to the eastern Australian energy grid.

The proposed power station would be built adjacent to the existing Moorabool-Heywood 500kV high voltage transmission line. Natural gas would be supplied from Santos's gas portfolio via a new dedicated 105km underground gas pipeline from near Port Campbell.

Santos said that front-end engineering design (FEED) studies will commence immediately. The project remains subject to regulatory and internal corporate approvals. A final investment decision is expected by the end of 2009 and the initial power generation is slated for 2012.

Various options for funding the project will be considered during the FEED process and it is not intended that this project will impact on the company's ability to maintain its credit ratios and fund its liquefied natural gas projects.