acorn,Yeah they do but my understanding is they have done very...

acorn,

Yeah they do but my understanding is they have done very little work on it, and probably won't until they're done drilling GLNG land.

It is an option down the track if they want to add train 3 later I guess, but it'll take years to prove up significant Reserves there, whereas ESG are of course adding Reserves now.

So ESG will be producing from their PELs while Santos are still doing exploration. Santos will have their 35% of the gas and the agreement probably specifies that it's theirs to do whatever they want with, but ESG as operator will be producing it and given the nature of CSG (you can't just shut in a well like you can a conventional well) they will be saying to Santos "here's your gas - where do you want it?"

Santos will presumably either have to try and secure domestic contracts (in an area controlled by AGL) or they'll have to sell it to ESG.

Although... Santos has current domgas contracts in NSW that it supplies from the Cooper, doesn't it? And with 750PJ of that gas now going to GLNG, maybe the Gunnedah could allow Santos to pick up the Cooper Basin slack with its 35%.

So I guess the end result of all this musing is... we really have no idea, Santos could do anything. Santos could buy ESG, they could buy gas from ESG, they could sell gas to ESG, they could use it for GLNG, or they could sell gas to a third party, domestic or Qld LNG.

No wonder Knoxy doesn't seem to be too worried. I think the aces are finding their way back up into his sleeves.