Australian Santos Signs New Domestic Gas Deal as LNG Export Block Decision Looms

Australian gas producer and LNG exporter, Santos, has signed another contract aimed at boosting domestic supplies, which comes days ahead of a schedule decision by the government on whether it will restrict LNG exports next year.

The deal is a three year location swap agreement for the delivery of at least 18 PJ/yr, which takes effect January 2018, Santos said August 30.

“This transaction demonstrates the ability for industry to efficiently work together and support the Federal Government in bringing more supply into the domestic market and help mitigate gas supply concerns,” Santos managing director, Kevin Gallagher, said.

Those concerns have led the government to implement new powers to block LNG exports during a “domestic shortfall year”. And, a decision on whether 2018 will be considered a shortfall year is scheduled to be made September 1.

Santos’ Gladstone LNG export terminal in Queensland is likely to be the hardest hit by any government-enforced LNG restrictions due to its heavy draw on the domestic gas market for its LNG sales.

Santos did not say who the location swap agreement is with.

It is understood that the third party gas will be provided to Santos in Queensland and will meet the company’s pre-existing GLNG commitments. Santos’ gas is expected to come from the Cooper Basin and be provided to the third party at the Moomba facility in South Australia, as well as other locations in New South Wales and Victoria.

The swap will allow for greater movement of gas without the need for separate transportation agreements.

“We want to continue to be the leader in delivering a more reliable, affordable and cleaner energy solution to Australian homes and businesses, and that means not only accessing more gas but using our Moomba infrastructure and pipeline capacity positions to assist its delivery,” Gallagher said.

Earlier in August, Santos signed an agreement with French Engie in Australia for the supply of 15 PJ of gas, starting in January, to the Pelican Point Power Station in South Australia, which is to be fulfilled with a mix of GLNG gas and Santos portfolio gas. 

Nathan Richardson