Santos has begun work to restore gas production at the Longtom field off the southeastern Australian state of Victoria, Longtom owner Nexus Energy said in a statement Tuesday.
Nexus owns 100% of Longtom, in Victoria's Gippsland Basin, but the field's gas production is processed at the Patricia-Baleen onshore plant, operated by Santos. The field was shut in on January 14 after the discovery of an electrical fault, which was subsequently determined to be located in the offshore facilities operated by Santos.
The offshore rectification and maintenance campaign began Tuesday and is expected to take between 10 and 15 days to complete, Nexus said. Gas production would recommence once the work has been completed.
Longtom produced 4.46 petajoules of gas and 35,300 barrels of condensate in the quarter ended December 31, 2012, in line with nominations.
Meanwhile, Nexus and Santos have struck a deal to amend their agreement over Longtom's gas production. The amendments, which take effect July 1, 2013, cover a revised production profile and pricing structure for the delivery of 83 petajoules of gas over the period to December 31, 2018, Nexus said.
The new arrangement is subject to conditions that Nexus obtains funding for the work required to satisfy the supply requirements and that Santos confirms the new Longtom-5 well can be accommodated into the existing subsea infrastructure. Both conditions may be satisfied or waived by the parties responsible.
Nexus plans to drill the Longtom-5 well in late 2014, with increased deliveries to Santos under the accelerated production profile targeted from early 2015. The required work program also includes a workover of the Longtom-4 well to access previously unexploited sands.
In addition, the amendments provide contractual arrangements for additional production from the Longtom area to be processed through Santos' Patricia-Baleen plant should volumes become available for sale prior to the end of 2018.
"This is a positive commercial outcome for both Nexus and Santos with the production profile re-aligned to meet future gas supply and demand," said Nexus Managing Director and Chief Executive Officer Lucio Della Martina. "The amended agreement increases the value of Longtom and a strategic review of the asset including growth options has been initiated."
