By David Winning

SYDNEY--Santos Ltd. said front-end engineering and design work will begin on the Dorado oil and gas project offshore Western Australia, ahead of a final investment decision planned for the middle of next year.

Santos owns 80% of Dorado and is currently offering a non-operated stake in the project for sale. Carnarvon Petroleum Ltd., also listed on the Australian Securities Exchange, owns the remaining 20% of Dorado.

Santos and Carnarvon plan to develop Dorado in two phases, with the first stage estimated to cost around US$2 billion, including the purchase of a floating production, storage and offloading facility.

Santos Chief Executive Kevin Gallagher expects an initial gross oil production rate of between 75,000 to 100,000 barrels per day of high-quality crude from Dorado. Production is likely to be sold at a premium price to regional benchmarks, he said.

"Entering FEED for the Dorado project is a significant milestone and has the project on schedule for a final investment decision around mid-2022, building on the investment decision on the Barossa gas project earlier this year," Mr Gallagher said.

Dorado's second phase will involve developing natural gas reserves nearby that could be fed back to Santos's existing gas infrastructure in Western Australia.

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

(END) Dow Jones Newswires

06-28-21 1919ET