By David Winning

SYDNEY--Santos Ltd. said it has cut around US$1 billion off the cost of developing the Barossa natural-gas project by awarding a contract for a floating production, storage and offloading vessel to BW Offshore.

The contract is the final milestone ahead of a final investment decision on the US$3.6 billion Barossa project, which will support production at the Darwin LNG facility on Australia's northern coast. It includes an upfront payment and an option to buy the FPSO.

"The decision to proceed with an FPSO services contract maintains a low ongoing operating cost while engineering enhancements have significantly reduced the project's carbon footprint," said Chief Executive Kevin Gallagher.

The FPSO will be built in South Korea and Singapore before being towed to the Barossa field where it will process natural gas that is later moved by pipeline to Darwin LNG. Condensate will be stored on the FPSO and then offloaded on to tankers.

Santos is targeting first gas production from Barossa in the first half of 2025.

Write to David Winning at david.winning@wsj.com

(END) Dow Jones Newswires

03-23-21 1833ET