Released January 23, 2025 | GALWAY, IRELAND
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Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland)--One of the largest oil and gas projects in Australia has been put on ice after key developer Santos Limited (Adelaide) announced that it will not proceed with plans to buy a floating production storage and offloading vessel (FPSO) needed for the first phase of the Dorado project.
The company also said that it is pausing plans to carry out front-end engineering and design (FEED) work on the AUS$3.2 billion (US$1.9 billion) Dorado oil and gas project in Western Australia, which is expected to push back the final investment decision (FID), which was due this year. "After a detailed assessment of all relevant factors, Santos recommended to the joint venture that the development concept for Dorado be revisited after further evaluation of Bedout Basin resources," a spokesperson told Reuters. The project is 80% owned by Santos with Carnarvon Energy (West Perth) and a unit of Taiwan's state-owned CPC Corp owning 10% each.
A Carnarvon statement read: "The Dorado JV operator has decided not to purchase the Floating Production Storage and Offloading (FPSO) vessel that had been identified as an option for the Dorado Phase 1 liquids development project. The Operator has also decided to not enter Front End Engineering and Design (FEED) at this stage. With the deferral of FEED entry, the previous target for a Final Investment Decision (FID) in 2025 will also be deferred. The Joint Venture is currently reviewing the timeline for the project and Carnarvon will update the market in due time."
Discovered in 2018, Dorado was the largest oil discovery made on Western Australia's North West Shelf in three decades. Estimates maintain that the field holds roughly 162 million barrels of light oil and condensate when measured on a "proven, probable and a contingent basis." Dorado also contains a large amount of natural gas. The cancelled FPSO vessel would have been capable of processing between 75,000 and 100,000 barrels of oil per day (BOE/d). Industrial Info is tracking 25 projects associated with the Dorado development. Subscribers to Industrial Info's Global Market Intelligence (GMI) Project Database can click here for the reports.
Shares in Carnarvon tumbled 22% on news of the setback. Carnarvon Chief Executive Officer Philip Huizenga commented: "Given the quality of the Dorado project, we at Carnarvon are disappointed by this latest deferral to the project. Carnarvon is fully supportive of the joint venture's desires to realise value for the asset and will support any initiatives for drilling as soon as possible."
Santos has previously stated that its goal for the coming year is to focus on maximizing shareholder value and developing its other gas projects, Barossa in Australia and Pikka off the coast of Alaska, which are coming online this year. Santos' Chief Executive Officer Kevin Gallagher had previously told investors: "With Barossa and Pikka coming online, Santos' production is expected to increase by more than 30% by 2027 compared to 2024, significantly lowering unit production cost which will support strong free cash flow generation throughout the commodity price cycle. The simplified capital allocation framework announced today reflects our commitment to prioritise shareholder returns following the company's investment over recent years in new production from Barossa and Pikka."
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 Trillion (USD).
The company also said that it is pausing plans to carry out front-end engineering and design (FEED) work on the AUS$3.2 billion (US$1.9 billion) Dorado oil and gas project in Western Australia, which is expected to push back the final investment decision (FID), which was due this year. "After a detailed assessment of all relevant factors, Santos recommended to the joint venture that the development concept for Dorado be revisited after further evaluation of Bedout Basin resources," a spokesperson told Reuters. The project is 80% owned by Santos with Carnarvon Energy (West Perth) and a unit of Taiwan's state-owned CPC Corp owning 10% each.
A Carnarvon statement read: "The Dorado JV operator has decided not to purchase the Floating Production Storage and Offloading (FPSO) vessel that had been identified as an option for the Dorado Phase 1 liquids development project. The Operator has also decided to not enter Front End Engineering and Design (FEED) at this stage. With the deferral of FEED entry, the previous target for a Final Investment Decision (FID) in 2025 will also be deferred. The Joint Venture is currently reviewing the timeline for the project and Carnarvon will update the market in due time."
Discovered in 2018, Dorado was the largest oil discovery made on Western Australia's North West Shelf in three decades. Estimates maintain that the field holds roughly 162 million barrels of light oil and condensate when measured on a "proven, probable and a contingent basis." Dorado also contains a large amount of natural gas. The cancelled FPSO vessel would have been capable of processing between 75,000 and 100,000 barrels of oil per day (BOE/d). Industrial Info is tracking 25 projects associated with the Dorado development. Subscribers to Industrial Info's Global Market Intelligence (GMI) Project Database can click here for the reports.
Shares in Carnarvon tumbled 22% on news of the setback. Carnarvon Chief Executive Officer Philip Huizenga commented: "Given the quality of the Dorado project, we at Carnarvon are disappointed by this latest deferral to the project. Carnarvon is fully supportive of the joint venture's desires to realise value for the asset and will support any initiatives for drilling as soon as possible."
Santos has previously stated that its goal for the coming year is to focus on maximizing shareholder value and developing its other gas projects, Barossa in Australia and Pikka off the coast of Alaska, which are coming online this year. Santos' Chief Executive Officer Kevin Gallagher had previously told investors: "With Barossa and Pikka coming online, Santos' production is expected to increase by more than 30% by 2027 compared to 2024, significantly lowering unit production cost which will support strong free cash flow generation throughout the commodity price cycle. The simplified capital allocation framework announced today reflects our commitment to prioritise shareholder returns following the company's investment over recent years in new production from Barossa and Pikka."
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 Trillion (USD).
