Shell inks Australian domestic gas supply deals

Shell’s QGC joint venture in Australia has signed two new domestic gas sales deals for power generation in South Australia and manufacturing in Queensland.

QGC, that became part of Shell when the Hague-based company acquired BG Group in February last year, is the operator of the 8 million tons per year QCLNG facility on Curtis Island near Gladstone.

The deal comes at times when the Curtis Island LNG producers are urged to allocate more gas supplies to Australian households and increase gas supplies for businesses.

Shell said in a statement it would supply around 8 petajoules (PJs) of gas to Engie’s Pelican Point power plant in South Australia for five months over the peak winter period to help secure electricity contracts to major industrial users.

In addition, an 18-month agreement will supply gas from Queensland’s Surat Basin gas fields to Orica’s Yarwun facility near Gladstone, which produces explosives and cyanide for the mining industry, the statement said.

Shell trims exports

“These new sales agreements come after significant contracts were signed with power generators and retailers,” Shell Australia chairman Zoe Yujnovich said, adding that together they bring QGC’s total domestic sales to about 11% of east coast demand for 2017.

“Shell’s business on the east coast has reacted to the gas market and reduced export volumes to supply additional gas to the domestic market during 2017,” Yujnovich noted in the statement.

Zoe said Shell had long held the view that community acceptance of an LNG export industry depended on a reliable supply of gas to Australian customers – including factories and homes.

“Make no mistake the business I lead is pursuing further domestic supply agreements – and has taken proactive steps to supply the east coast gas market,” she said.

Shell’s QGC business will sell more than 75 PJs net of domestic gas purchases, to customers in Australia this year.

This represents more than 10% of east coast gas demand and 40% of Queensland’s demand, the statement reads.

LNG World News Staff