(Bloomberg) -- ConocoPhillips has agreed to sell its northern Australia business to Santos Ltd. in a $1.39 billion deal that will boost the Australian oil and gas producer’s position in the Asian liquefied natural gas market.

Under the accord, Conoco will sell its operating interests in the Darwin LNG processing plant, as well as the Bayu-Undan, Barossa and Poseidon gas fields, Santos said Monday in a statement. The company will fund the acquisition from existing cash and new debt.

“The acquisition of these assets fully aligns with Santos’ growth strategy to build on existing infrastructure positions, while advancing our aim to be a leading regional LNG supplier,” Santos Chief Executive Officer Kevin Gallagher said.

South Korean firm SK E&S has signed a letter of intent to take a 25% interest in Darwin LNG and Bayu Undan as part of the agreement. Santos said it was also in talks with existing Darwin LNG joint venture partners, including Inpex Corp, Tokyo Gas Co. Ltd., Jera Co. Inc. and Italy’s Eni SpA, for equity in Barossa, which has been earmarked to backfill the Darwin LNG plant once Bayu-Undan reserves run dry around the end of 2022.

“This transaction allows us to allocate capital to other projects that we believe will generate the highest long-term value to ConocoPhillips,” Conoco executive vice president and chief operating officer Matt Fox said in a statement.

To contact the reporter on this story: James Thornhill in Sydney at jthornhill3@bloomberg.net

To contact the editors responsible for this story: Ramsey Al-Rikabi at ralrikabi@bloomberg.net, Keith Gosman, Edward Johnson

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