Santos signs second gas purchase agreement with Origin Energy

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Santos GLNG Image credit: flickr User: santosglng

Santos Ltd signed a second purchase agreement with Origin Energy in order to secure the necessary supplies for its Gladstone liquefied natural gas (LNG) export plant in Eastern Australia.

Santos GLNG  Image credit: flickr User: santosglng
Santos GLNG
Image credit: flickr User: santosglng

Origin is to supply 100 petajoules (PJ) of gas at oil-linked prices over the course of five years starting in January 2016.

According to the news announcement by Santos, the gas will be supplied at Wallumbilla and the new deal adds to a previous agreement with Origin for a supply of 365 PJ over the course of ten years.

With the new agreement, Origin can supply an additional 94 PJ of gas during the same five year period.

Rod Duke, Vice President of Downstream GLNG, said GLNG had secured a diverse gas supply portfolio, including supply from GLNG’s own coal seam gas fields, Santos portfolio gas, underground storage and third party supply.

“When combined with GLNG’s quality LNG off-take contracts with project partners PETRONAS and KOGAS, this supply portfolio delivers significant value to the project.”

“The GLNG project is progressing well – we are now more than 72% complete and remain on track for first LNG in 2015,” Mr Duke said.

Santos has purchase agreements for 750 PJ of gas over a fifteen year period, aside from the aforementioned agreements.

Santos owns 30% of the Gladstone project, while Malaysia’s Petronas and Total own 27.5% each. The project has binding offtake agreements with Petronas and KOGAS for 3.5 mtpa over the course of 20 years.

Gladstone is one of three coal seam gas to LNG export projects on the eastern seaboard of Australia. The other two are the Queensland Curtis Island LNG plant which is to be brought online by BG Group in 2014, and Conoco Phillips’ Australia Pacific LNG which is to be brought online in the following 2015.