Despite price slump, Santos plans A$1.5 billion oil exploration investment in 2009

07 May 2009

Despite the global economic slump, Santos, Australia's third largest oil producer, plans to invest A$1.5 billion ($1.13 billion) in 2009 for its exploration and development activities including the prestigious multi-billion dollar Gladstone liquefied natural gas (LNG) project.

''We are going to invest A$1.5 billion this year, so we are in a very strong position and really moving forward with real pace,'' Santos chief executive David Knox told reporters yesterday in Adelaide after the annual general meeting. 

''When the recovery does come, and goodness knows when that will be, then there will be a shortage of energy and that will be a real concern.'' Knox added.

Santos is developing a $7.7 billion project at Gladstone in Queensland-the world's first project for conversion of coal seam gas (CSG) to LNG on a large scale.

The company forecast a production target of 53 to 56 million barrels of oil equivalent (BOE) for 2009 and expects a further surge in production in 2014.

Santos chairman Stephen Gerlach told the annual general meeting: ''We are expecting steady production levels in the near term before a step-change in 2014 when the Gladstone LNG and Papua New Guinea LNG projects come online.''
 
In a year of unprecedented stock market volatility, Santos shares outperformed the market and was one of only eight ASX100 companies whose share price rose during the severe stock market downturn in 2008 when the overall market fell by more than 40 per cent, Gerlach said.