Santos finds rivals can be workmates
Drilling pipes go down in the search for oil and gas in the Cooper Basin. Photo: Brendan Esposito
SANTOS, which is building a liquefied natural gas project in Queensland, plans to collaborate with rivals to cut costs as rising expenses threaten $156 billion of industry developments in Australia.
''We're all working together to see how we can drive costs out collectively and lots of things are being considered,'' chief executive officer David Knox told the ABC on Sunday. ''Costs in Australia are extremely high and it is a concern.''
Santos, Australia's third-biggest oil and gas producer, wants to ''join forces'' with competitors at a range of levels, Mr Knox said.
Santos is constructing the $18.5 billion Gladstone project, one of seven liquefied natural gas projects being developed in Australia to meet rising Asian demand. Mr Knox's concern that rising costs put future investment at risk follows delays to projects and expansion by BHP Billiton and Fortescue Metals.
Santos has fallen 11 per cent this year in Sydney trading, trailing the 8.8 per cent gain by Australia's benchmark S&P/ASX 200 Index.
Mr Knox said the natural gas industry was already sharing some resources, such as safety statistics and medical evacuation helicopters, to cut costs on the east coast. That kind of co-operation might spread to projects on the west coast, he said.
''Each one of us, in some respects, is seeking to join forces in both the upstream and the downstream, where it makes sense,'' he told Inside Business. ''We're seeking opportunities to work together and you're going to see that continue.''
Santos' operations include the $490 million Fletcher-Finucane oil project in the Carnarvon Basin, the Chim Sao oil field in Vietnam and in central Australia's Cooper Basin.
The company expects capital spending of $4 billion next year, the peak for spending on the Gladstone project. That includes outlays on the Exxon Mobile Corp-led LNG venture in Papua New Guinea.