* First cargo heads to South Korea
* One of seven new projects set to triple Australia's LNG exports
* Helps push up shares in operator Santos (Adds Australia minister, analyst comment)
By Sonali Paul
MELBOURNE, Oct 16 (Reuters) - The first cargo from the $18.5 billion Gladstone liquefied natural gas project left on Friday, the second of seven new Australian developments putting the country on track to overtake Qatar as the world's top LNG exporter in the next three years.
The launch was a rare piece of good news for Santos Ltd STO.AX , the operator of the project, which is racing to sell assets to cut its $8.8 billion in net debt and help it ride out what is expected to be a prolonged period of weak oil prices.
The maiden cargo from the world's second LNG plant fed by coal seam gas is headed to Korea Gas Corp (KOGAS) 036460.KS in South Korea, just as spot LNG prices in Asia LNG-AS have tumbled to a record low.
Most of Gladstone's 7.8 million tonnes a year production is locked into 20-year oil-linked contracts with KOGAS and Malaysia's Petronas PETR.UL , both of which are partners in the project along with France's Total SA TOTF.PA , giving the owners confidence in long-term returns.
"(This) is a robust project and will generate strong cash flows for the business for decades to come," Santos Chief Executive David Knox said in a statement.
But the expected profits have been crushed since Gladstone was approved in January 2011, with oil prices halving and the global gas market slumping with the advent of abundant shale gas in the United States.
"It's very important to get (Gladstone) up and running. But the challenge is beyond the current wave of LNG projects. The outlook beyond that looks very difficult," said UBS analyst Nik Burns.
The oil price collapse, high labour costs and potential competition from the United States, Canada and east Africa have put $180 billion of potential Australian LNG expansions and developments at risk and sparked a government push to lure Asian investors.
Resources Minister Josh Frydenberg visited Japan this week to promote Australia's reliability as a supplier to the world's largest LNG importer, touting moves to simplify environmental approvals and speed up labour agreements for new projects.
"While Australia is seeing - and globally all countries are seeing - less and less investment as prices come down, there is still an urgent need for these investments to take place," Frydenberg told reporters in Tokyo.
Santos shares jumped over 4 percent on Friday, adding to a sharp rebound off a 15-year low this month after rival Origin Energy ORG.AX , facing similar debt woes amid the start-up of a new LNG project, won support for a $1.8 billion share sale.
($1 = 1.3646 Australian dollars)
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