Santos has signed a letter of intent (LoI) to divest a 12.5% stake in Barossa project, offshore Northern Australia, to Japanese firm JERA.

JERA already owns has a 6.1% interest in Darwin LNG onshore facility, which is scheduled to receive supplies from Barossa.

The move comes nearly a month after Santos decided to postpone the final investment decision (FID) on the Barossa project due to the Covid-19 crisis.

According the Santos, the transaction will advance partner alignment between the Darwin LNG and Barossa joint ventures to develop the offshore field as backfill for Darwin LNG.

However, the completion of the latest deal is subject a range of factors, including the signing of binding sale and purchase agreement, as well as regulatory approvals, among others.

Santos recently signed an agreement to divest 25% interest in Darwin LNG to SK E&S.

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Santos managing director and CEO Kevin Gallagher said: “Santos continues to build alignment between the Darwin LNG and Barossa joint ventures.

“Following completion of the ConocoPhillips acquisition and the sell-downs to JERA and SK E&S, Santos will hold a 43.4% interest in Darwin LNG and a 50% interest in Barossa.

“We are continuing to advance discussions with other parties for the sale of further equity in the Barossa project in line with our previously stated target ownership level of around 40% to achieve increased partner alignment and prudent future allocation of growth capital.”

Discovered in 2006, Barossa is an offshore gas and condensate field located around 300km north of Darwin, Northern Territory.

Besides Santos, ConocoPhillips Australia Exploration and SK E&S Australia hold interests in this project.