Australia’s Santos in another domestic gas deal

Australia’s Santos, the operator of the GLNG project on Curtis Island, entered into a long-term agreement to supply natural gas to New Century Resources in northwest Queensland.

Under the gas supply deal, Santos will provide over the next four years around 9 petajoules (PJ) of portfolio gas worth in the order of A$100 million ($79.3m) delivered, to generate electricity for New Century’s zinc mine near Mt Isa, according to a Santos statement.

The New Century zinc mine is set to become one of the top 10 zinc producers in the world.

It will also be in the lowest cost quartile globally, demonstrating the competitiveness of both Australian industry and Australian gas, the statement claims.

According to New Century Resources, there was strong participation from gas suppliers and traders in what was a highly-competitive tender process.

Santos Executive Vice President Marketing and Trading, Phil Byrne said, “Santos is delighted to have been selected to supply gas for New Century’s world class Century Zinc Mine and we’re looking forward to a long-term cooperative relationship with the company.”

Byrne added that the gas sales deal “is innovative in both its flexibility and pricing, making it commercially attractive for both parties.”

“Access to new and existing supply sources in Queensland as well as new sources in New South Wales and the Northern Territory is critically important to enable us to continue to deliver competitive gas for Australian industry on the east coast as mature fields decline,” he said.

Santos and its partners in the GLNG venture have signed several domestic gas supply deals after the Australian government unveiled its Australian Domestic Gas Security Mechanism (ADGSM) under which it can intervene to ensure there is a sufficient supply of natural gas to meet the forecast needs of Australian consumers.

It will do this by requiring LNG projects which are drawing gas from the domestic market to limit exports or find offsetting sources of new gas.

“When combined with existing agreements announced in 2017 and 2018, today’s announcement brings Santos’ total 2018 contribution to the east coast domestic gas market to around 70PJ, which is 11 percent of the ACCC’s expected demand for 2018,” Santos said.