Some more details courtesy of the wire services...I like the...

Some more details courtesy of the wire services...

I like the line it's selling a 9 per cent stake to fund more growth prospects...

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Reuters/AAP

SYDNEY - Santos Ltd is in talks to sell an equity stake in its Gladstone liquefied natural gas (LNG) export project, a move aimed at boosting its balance sheet to fund its suite of growth projects.

Santos, Australia's third largest oil and gas producer, said on Monday it was in discussions with a number of Asian LNG buyers on potential sales from the project, including the potential for buyers to purchase an equity stake.

It expects to make more announcements on gas sales before making a final investment decision on the project in mid-2010.

Santos has previously said it was looking to sell up to a nine per cent stake in Gladstone, which would leave it with 51 per cent. Malaysia's Petronas holds 40 per cent.

After having raised $3 billion last year to strengthen its balance sheet, analysts have said that sale of a stake in the project would reduce the chance that Santos would need to go back to equity markets.

The company needs to finance its coming spending requirements at Gladstone and its 17.7 per cent stake in a $US15 billion ($A16.2 billion) Papua New Guinea LNG project. Analysts have estimated that Gladstone could cost as much as $9 billion.

Petronas talks extended

Santos also said a timeframe for talks with Petronas over an option to supply additional liquefied natural gas (LNG) had been extended.

GLNG announced on June 18 that it had entered a heads of agreement to sell two million tonnes per annum (mtpa) of liquefied natural gas to Petronas, with an option for an extra one mtpa on the same terms should GLNG elect to supply.

The agreement with Petronas underpins the volumes for the first train of the GLNG project.

"GLNG remains in detailed ongoing discussions with a number of Asian LNG buyers in relation to potential sales from the GLNG project," Santos said in a statement on Monday.

"GLNG anticipates making further announcements on marketing prior to the final investment decision which is due mid-2010."

Santos said that as a result of the ongoing talks with potential buyers, GLNG had advised that the timeframe for GLNG to exercise the option to supply Petronas with the extra one mtpa had been extended to the final investment decision on the first train.

Gladstone, located near a port in the northeastern state of Queensland, will have a production capacity of 3.5 million tonnes per year (mtpy) of LNG and will use coal seam gas reserves as feedstock.

The firm has up to 1.5 mtpy of LNG left to sell from the first planned gas processing train at Gladstone, after a sales deal last year to sell up to three mtpy of LNG to Petronas.

By 1049 AEDT, Santos shares had risen 0.41 per cent to $14.35, against a 0.7 per cent increase on the benchmark index.