Santos has announced it has agreed to binding terms to extend its current gas supply deal with Brickworks.
The new long-term agreement will start in January 2025 for another 11 years with the possibility of subsequent extensions.
The arrangement will provide Brickworks with long-term assurance of economical gas supply while also supporting Santos’ investment in additional gas supply for the east coast market.
Santos Managing Director and CEO Kevin Gallagher stated that the agreement would see Santos deliver up to 35 petajoules of natural gas to Brickworks at competitive, stable, CPI-linked prices for 11 years beginning in 2025, with an option to extend the contract further.
“As the largest brickmaker, Brickworks has more than 1,100 employees in Australia producing around 500 million bricks per annum on the east coast, or enough to build approximately 50,000 houses. This deal locks in affordable, reliable, long-term gas supply security for this important supplier of building materials,” Gallagher said.
According to Gallagher, the transaction is significant to Santos as it provides long-term cash flows that will help fund future drilling and development in the Cooper Basin, Eastern Queensland, and at Narrabri, which will bring urgently needed new gas supplies to the east coast domestic market.
He added that the agreement provides critical energy security to Brickworks and the broader construction industry because there are no technically or economically feasible options for electrification or conversion to zero-emission fuels such as hydrogen on the horizon, so these products could not be manufactured in Australia without gas.
“Santos and Brickworks share an ambition towards decarbonisation and intend to collaborate on exploring net-zero energy transition opportunities, potentially including post-combustion capture, and carbon capture and storage,” Gallagher said.
Gallagher stated that Santos values Brickworks as a devoted, long-term client and knows that increasing investment in new domestic gas supply sources is the only sustainable approach to lower gas prices and provide a dependable, long-term gas supply.
“Santos’ Narrabri Gas Project is 100 per cent committed to the domestic gas market and is a vitally important project to free up Cooper Basin gas for South Australian customers and increase gas supply for east coast customers, particularly in New South Wales. The Hunter Gas Pipeline is just as important to get Narrabri gas to market and potentially provide a second pathway to move Queensland gas south,” Gallagher added.
According to him, if governments are serious about lowering gas costs, they must allow the private sector to get on with the job of increasing gas supply to the market, and all governments must work together to remove impediments and speed up investment in these projects.
