Oil and gas producer Santos Ltd (ASX: STO) said on Monday that it has acquired a $2 billion bilateral bank loan facility which it intends to use in boosting the company's balance sheet flexibility and expansion plans that include its Gladstone liquefied natural gas (LNG) project in Queensland.

The company said that the new loan would be utilised to refinance its existing $700 million of undrawn bilateral bank facilities that are set to reach maturity from 2011 to 2014 and to jack up its balance sheet's liquidity.

Santos executive vice president and chief financial officer Peter Wasow said that the new facility should provide for additional liquidity while constructions of both the Gladstone and Papua New Guinea LNG projects are underway.

Mr Wasow added that the weighted average term of the new facility is about five years and scheduled to reach maturity just in time for the two projects' expected first LNG outputs, which should commence in 2014 for the Gladstone projects whereas the PNG project should start producing by late 2013 or early 2014.

Santos said that existing and new lenders were behind the new loan facility as it added that it was self-arranged and a total of 13 attracted banks initially offered an estimated $2.9 billion, from which the company accepted nine offers.

For now, the company said that it holds a $6 billion of available funding capability, which includes the new facility, cash holdings and committed corporate and project debt facilities.

As of 1242 AEST on Monday, Santos shares were trading at $13.72, improving by seven cents from the last trading day.