LNG project gets up head of steam

THE Santos Gladstone Liquefied Natural Gas project continues to build momentum with the latest move by the company to strengthen its balance sheets.

Santos yesterday announced the issue of about $900 million in Subordinated with Standard & Poor's confirming that the hybrid will receive 100 per cent equity credit.

As part of de-risking the GLNG project, Santos has proactively taken steps to strengthen its balance sheet in preparation for a final investment decision.

Santos executive vice-president and chief financial officer Peter Wasow said the hybrid issue demonstrated Santos' ability to source capital from a diverse range of sources on attractive terms.

“The strong support we received from offshore and domestic investors demonstrates the strength of the Santos credit,” he said.

“Given the 100 per cent equity credit classification from S&P, this hybrid directly reduces the amount of any potential equity that may be required, on a dollar for dollar basis, to maintain Santos' BBB+ credit rating.”

Gladstone Industry Leadership Group chief executive officer Kurt Heidecker said a company wouldn't go ahead with such measures unless they were confident they were going ahead with a project.

GLNG has received environmental approval from the Queensland Government and is awaiting approval from the Federal Government.

Santos expects to reach a final investment decision on the first train by the end of 2010. The capital expenditure committed to at this time will include pre-investment for the second train, for which FID is expected to follow in 2011.

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