I think that there may be a large GSA with Santos in the wings. I have to agree with Stumpy on this one, (but acknowledge Nervouswreck's contrary views also).*
Think about it - We know that Santos do not have enough gas of their own to FID two trains. Even when they include their 'portfolio gas' (their share of PEL 238) and the 750PJ from the Cooper, their gas position still looks poor. And it is certainly far more economic for Santos to support a pipeline north based on 100% of the PEL 238 gas rather than just their 35%.
And, if Santos could sign a GSA with ESG, that would certainly be in Santos' interests. Imagine getting access to all that gas without outlaying extra capital... ideal, especially if ESG won't agree to an agree acquisition price.
The fact that Santos have been able to sign up Kogas and sell down further equity says that they can now guarantee supply to their new customers and equity partners. The fact that they are in a position now to make an FID says this also.
No one commits to a $16 billion capex project just on the basis of large future upgrades. People don't lend money on that basis. They don't buy equity on that basis. And they don't make FIDs on that basis.
* Nervous makes that point that why would ESG sign a GSA with Santos - wouldn't that limit their corporate appeal? Yes, I agree, it would. But lets turn things around. We have all been talking about ESG doing something unacceptable to Santos. What if ESG signing a GSA with Santos is unacceptable to a third party? Would that force them to 'act now, or forever hold their peace'?
At the AGM, David Casey was quite defensive of Santos, and described the relationship as "in good shape". So perhaps it is in good shape because ESG and Santos were agreeing on a GSA which would support GLNG, the Kogas buy-in and FID.
There may yet be surprises. But it does seem that numerous catalysts are all coinciding this week or next.
Yaq
ESG Price at posting:
81.5¢ Sentiment: Buy Disclosure: Held
