Santos sells 60% stake in some Australia gas fields to GDF * Santos, GDF to develop floating LNG project in Australia * Project to have output of 2 million tonnes per annum (Adds details, updates share price, analyst's comments) By Fayen Wong PERTH, Aug 18 (Reuters) - France's GDF Suez (GSZ.PA) and Australia's Santos Ltd (STO.AX) have set up a joint venture to develop a floating liquefied natural gas (FLNG) project off northwest Australia in GDF's first foray into Asia. The partnership also increases Santos' LNG portfolio to four projects, an important move as it seeks to expand its footprint in Asia and realign its business to focus on the burgeoning LNG sector to boost its long-term growth outlook. Under the deal, Santos will sell a 60 percent stake in its Petrel, Tern and Frigate gas fields in the Bonaparte basin of northwest Australia to GDF for $200 million in cash, the companies said in a joint statement on Tuesday. GDF will also make an additional payment of $170 million when the project reaches a final investment decision and carry Santos' share of pre-front end engineering design (FEED) and FEED costs for the two million tonnes a year project, named Bonaparte LNG. "Santos is clearly the winner in this deal. They are carrying minimal risk but are exposed to a very strong upside if the proposed project goes ahead," said Stefano Vincelli, an equities and derivatives broker at Halifax Investment Services. "The deal will also give Santos more working capital for its other LNG projects." Santos, Australia's third-largest oil and gas producer, said that based on the $200 million upfront payment, it will book a profit of about A$160 million ($131.3 million) after tax in the second half of 2009. Shares in Santos were up 1.5 percent at A$14.72 by 0334 GMT, after rising earlier by as much as 2.3 percent. The benchmark S&P/ASX 200 index .AXJO was down 0.3 percent. Santos has previously flagged the sale of its assets in the Timor Sea, off the north coast of Australia. The three fields that will underpin the FLNG project represent just 30 percent of its assets in the Timor Sea and it says its considering options to commercialise its Evans Shoal, Barossa and Caldita gas fields, also in the area. GDF GETS FOOTHOLD IN ASIA GDF, which will become operator of the project by 2011, will have a 60 percent stake in the joint venture, while Santos will hold the rest. The French energy firm will also take all the LNG production and sell it to markets in the Asia-Pacific region.Analysts say the deal is also a significant one for GDF, owner of Europe's biggest natural-gas network, giving the group a foothold in the region -- home to some of the world's largest LNG buyers -- and extending its LNG supply portfolio. "The partnership and Bonaparte Basin development is a key priority for GDF SUEZ globally. By extending our reach to the Asian market, it allows us to offer a truly global LNG marketing platform to our customers," GDF Chief Executive Gerard Mestrallet said in the statement. GDF is participating in three LNG liquefaction projects, including Atlantic LNG in Trinidad and Tobago, Egyptian LNG and the Snohvit project in Norway. Although FLNG is still an untested technology, it has attracted growing interest in recent years from firms such as Royal Dutch Shell (RDSa.L), Norway's Golar LNG (GOL.OL) and Flex LNG FLNG.NFF, who say FLNG could also be used to monetise smaller gas deposits that do not justify the expense of a full-scale onshore plant. For a list of proposed FLNG projects, click on [ID:nSP29086] ($1=1.219 Australian Dollar) (Editing by Clarence Fernandez)

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