* Santos seeks to cut net debt to $3 bln by 2019
* Focus on PNG and Australian gas assets
* Other offshore assets and ageing oil non-core (Adds CEO comments)
By Sonali Paul
MELBOURNE, Dec 8 (Reuters) - Australia's Santos Ltd STO.AX will cut costs and put some assets up for sale in a turnaround strategy announced on Tuesday, aiming to reduce debt over the next three years and set itself up to grow as a gas producer.
The push to focus on long-life gas assets comes after the company has struggled with the debt load for its flagship Gladstone liquefied natural gas project amid a collapse in oil and gas prices, forcing a cost-cutting drive to boost cash flow.
"I believe this improved operational performance provides a strong foundation for us to implement a new strategy for Santos...where we can focus on growth rather than survival," Chief Executive Kevin Gallagher told analysts.
Santos, which counts China's ENN Group as its largest shareholder, is going to focus on five long-life gas projects in Australia and Papua New Guinea, while pooling together its remaining assets, including stakes in Indonesia and Vietnam and ageing oil fields in Australia, into a separate business.
Gallagher said Santos would sell these assets if it received a good enough offer.
"Santos will target a US$1.5 billion reduction in net debt to less than US$3 billion by the end of 2019 through increased operating cash flow and releasing capital through non-core asset and infrastructure sales," the company said in a statement.
Gallagher highlighted that the company has already slashed costs to generate free cash flow at an oil price above $39 a barrel, down from $47 when he began the job in February.
Santos shares, which have lost two-thirds of their value since oil prices collapsed in mid-2014, rose as much as 3.2 percent on Thursday, but pared gains on concerns about its flat production profile over the next few years.
RBC analyst Ben Wilson said the company's guidance for sales in 2017 of 73-80 million barrels of oil equivalent (mmboe) was well below his forecast for 85 mmboe.
ENN Group's listed unit ENN Ecological 600803.SS , which has asked for a board seat, was not immediately available to comment on the new strategy. flagged that GLNG, which started exporting a year ago, would increase sales to around 6 million tonnes a year over its three-year ramp-up, well below its capacity of 7.8 million tonnes, but would offer the extra space to other producers.
Santos will target growth in Papua New Guinea, where it owns a stake in the PNG LNG project run by ExxonMobil XOM.N and recently bought into another exploration prospect, Muruk.
The Cooper Basin in South Australia will come back into focus, Gallagher said, while Santos sees its offshore holdings in the Northern Territory potentially supplying gas to ConocoPhillips' COP.N Darwin LNG plant after 2022.