Australia’s oil and gas giant Santos on Thursday lowered its production guidance for 2025 as a result of a software issue impacting the ramp-up of the new Barossa LNG project and floods in the Cooper basin that affected output.
In its third-quarter report out today, Santos narrowed its production guidance for this year to between 89 million and 91 million barrels of oil equivalent (boe), down from the previous guidance of 90-95 million boe.
The downgrade primarily reflects a slower-than-anticipated start-up of the floating production, storage, and offloading vessel (FPSO) at the new Barossa LNG project and the impact of floods on the company’s production in the Cooper Basin. Recovery efforts following the floods have extended into the fourth quarter, and 155 wells are still offline due to flood water levels receding more slowly than expected, Santos said.
At the Barossa LNG project, where the FPSO last month received first gas on to begin production phase commissioning and operations, software issues affected the safety systems onboard the BW Opal FPSO.
The software issue resulted in an unplanned shutdown of around two weeks during September, impacting the ramp-up of the Barossa project, Santos managing director and CEO Kevin Gallagher said today.
Santos has been in the spotlight since the summer, when a consortium led by Abu Dhabi’s state energy major ADNOC approached the Australian company with an $18.7-billion takeover offer. But last month, the consortium withdrew the bid, due to disagreements over price.
Santos is confident it can hike cash flow and returns to shareholders with major upcoming projects, CEO Gallagher said after the collapse of the takeover.
Santos bets big on the Barossa LNG project and the Pikka oil project in Alaska for boosting oil and gas output in the coming months. The two projects are set to boost Santos’ oil and gas production by 30% by 2027, and hike cash flows.
By Tsvetana Paraskova for Oilprice.com
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