santos lng project, page-3

STO are proposing a 3-4mtpa (170PJ - 220PJ pa) LNG facility. LNG prices have a higher base than domestic contracts, plus upside sharing referenced to the oil price. Recent LNG contracts into Shanghai have been negotiated at reportedly $US6/mmbtu FOB, or around twice the price of domestic Australian gas contracts.

AOE have already proposed a 1-2mtpa facility at Gladstone but there are plenty of doubters out there due to the small size of the facility harming the economics of the project.

Not only could MPO deliver into STO's facility if they were short gas, it takes a great deal of supply out of the East Coast market at a time when demand will be increasing due to carbon emission pricing. Then there is always the option that MPO could form a JV with the likes of SHG to build their own LNG facility.