Australia's largest onshore oil and gas producer is increasingly acquiring offshore and overseas assets. It envisages soon being a major stakeholder in an expanded Darwin LNG operation and a new ExxonMobil-operated Papua New Guinea LNG plant, executive vice-president of operations Jon Young told a press briefing at the company’s Moomba plant on Sunday.

Young said LNG was an important means of Santos developing from its current mature asset base in the Cooper-Eromanga Basin and in Western Australia.

The Cooper Basin still had about 3 trillion cubic feet of recoverable natural gas and would probably be producing has for another 40 years, but LNG was fetching higher prices than gas could achieve in Australia, making LNG attractive to Santos, he said.

However, LNG projects had long lead times and Santos would rely on the low-margin but low-risk Cooper Oil Project, which aims for 1000 wells over the next few years, and rapid growth in coal seam methane to deliver short-to-medium term growth.

Santos and Darwin LNG operator ConocoPhillips are undertaking an aggressive Timor Sea exploration program that has already delivered the Caldita and Barossa gas discoveries. But Young said much more appraisal work was needed to determine whether there were sufficient gas reserves to justify an expansion of Darwin LNG from 3.5 million tonnes per annum 10MMtpa.

Young said he expected a reserves assessment to be completed by the end of the year.

Meanwhile in PNG, ExxonMobil is undertaking preliminary studies into an LNG project based on the Hides gas reservoir in which Santos has a 25% stake.

Feasibility studies could be completed by the end of the year and a final investment decision was likely before the end of 2008, Young said.