Santos and its joint venture partner Beach Energy have approved the final investment decision (FID) for the Moomba Central Optimisation (MCO) project in South Australia’s Cooper Basin.
The MCO project entails an investment of A$607m.
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Santos’ share of the investment will be A$357m in the project over a three-year period. The company said that this capital expenditure is fully budgeted, and that it will maintain its all-in free cash flow breakeven target of A$45–50 per barrel.
Beach Energy will invest around A$250m in the optimisation project across three years. The company has a stake of around 33% in the Moomba carbon capture and storage (CCS) project near the Moomba Gas Plant.
Santos holds the remaining stake of roughly 67% in the CCS project.
The MCO project involves replacing seven aging gas-powered compressor stations with a single electric-driven compressor station. This change is intended to streamline upstream infrastructure and support future production increases from the Cooper Basin Central Fields.
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By GlobalDataAdditionally, the Moomba Gas Plant will receive new inlet compression and power generation capacity to manage gas inflow and supply power to the upstream satellite.
The MCO project aims to deliver combined capital and operating expenditure savings of more than A$1bn to Santos and Beach Energy across the lifespan of the Central Fields by deploying updated infrastructure.
Beach Energy managing director and CEO Brett Woods said: “The MCO project will unlock significant value from the Cooper Basin asset, driven by efficiencies gained from the rationalisation of existing satellite facilities into a new centralised compression facility, and supporting future production growth from the Central Fields.
“All of Beach’s equity gas from the Cooper Basin is delivered directly into the east coast market, and our investment in the MCO project will enable us to extend our role as a significant east coast gas contributor.”
Santos is targeting a reduction in unit production costs of up to A$3 per barrel of oil equivalent and has estimated an internal rate of return (IRR) of above 15% for the MCO project.
Full development of the Central Fields, which account for more than 50% of remaining proved and probable reserves in the Cooper Basin, is expected to achieve an IRR greater than 25%.
Santos managing director and CEO Kevin Gallagher said: “The Cooper Basin has been a cornerstone of Australia’s gas supply for more than 60 years. The MCO project will unlock significant value by modernising our infrastructure and extending the productive life of this world-class resource.
“This project demonstrates our commitment to operational excellence and capital efficiency. By replacing aging infrastructure with modern, electric-driven technology, we will reduce operating costs, improve reliability and lower emissions.
“Importantly, the project is estimated to reduce Santos scope 1 emissions by over 40,000t of CO₂ equivalent per year, supporting our scope 1 emissions reduction targets. The Cooper Basin will continue to play a vital role in Australia’s energy security, supplying gas to South Australian and eastern Australian markets.”
Santos recently signed a key term sheet with the South Australian Government for gas supply totalling 20 petajoules per year from 2030 to 2040 for the state’s strategic gas reserve. If a formal gas supply agreement is concluded, Santos plans to invest prepayment funds from this arrangement in the MCO project.
Last month, Santos announced its financial results for the year ending 2025, reporting net profit of A$818m, a 33.9% decrease from the previous year’s A$1.26bn.
