MALEO NEGOTIATIONS
ADVANCED
Outside Australia, Santos and 
its co-venturers have executed 
a Heads of Agreement for the 
sale of the entire gas reserves 
of the Maleo field offshore East
Java, Indonesia. Santos continued
negotiations with PT Perusahaan
Gas Negara, Indonesia’s state-
owned gas distributor, on behalf
of the joint venture to finalise
the Gas Sales Agreement. The
project is targeting first
production in the first half of
2006 at rates of up to 100
mmcf/d for more than five years.
FIRST RETAIL GAS SALES WITH
SANTOS DIRECT
As well as selling gas into the
wholesale gas market, Santos
secured a retail gas licence from
the Victorian Government in
2004. This allows Santos to sell
gas direct to industrial customers
and into the Victorian spot
market through a wholly-owned 
subsidiary, Santos Direct Pty Ltd
(‘Santos Direct’).
Santos Direct will market Santos’
10% share of gas production from
the Minerva field – around 15
TJ/d – in the offshore Otway
Basin, which commenced
production at the end of 2004.
The move to market and sell gas
directly into the Victorian retail
market is a first for Santos and
leverages off Santos’ position as
one of Australia’s largest gas
producers, supplying wholesale
gas to major industrial customers
and specialist marketers in all
mainland Australian states and
territories.
LIQUIDS MARKETING 
ALLIANCE WITH BP
Another important marketing
development during the year was
the decision to outsource the
marketing of crude oil and natural
gas liquids to BP. The new
marketing arrangements are in
response to the significantly
higher volumes of crude oil 
that Santos will receive from 
the Mutineer-Exeter and Oyong
projects, coming on stream 
in 2005, and the increasing
globalisation of the liquids
marketplace. 
The validity of this approach has
already been demonstrated by the
sale of the first Mutineer-Exeter
oil cargo at a premium to Tapis
despite a discount for the
uncertain delivery date.
Santos continues to build 
an inventory of high quality
options to provide a platform 
for production growth over 
the coming years. Santos is
committed to a program of
diversification while capitalising
on the long-term Cooper Basin
legacy asset. Most importantly,
this involves leveraging 
the strengths of the core
competencies built up over 
a number of years and Santos' 
well-positioned domestic 
gas franchise.
Annual Report 2004 21
‘During 2004 we brought
together everyone at Santos
responsible for commercialisation
into a single team. One of the
outcomes from this was the
introduction of gas swaps, 
where we were able to move 
gas between Santos assets in
different states. ’
RICK WILKINSON 
Vice President 
Gas Marketing 
and Commercialisation
The alignment of joint venture
interests in the John Brookes and
East Spar fields has created an
important production hub at
Varanus Island, Carnarvon Basin,
offshore Western Australia.
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