Santos pens ten-year LNG supply deal with Japanese firm

Australia’s energy giant Santos has signed a binding multi-year liquefied natural gas (LNG) supply and purchase agreement (SPA) with Japanese gas utility Hokkaido Gas to provide LNG for the Hokkaido region.

SPA signing ceremony; Source: Santos

The long-term SPA, slated to start in 2027, will supply up to 0.4 million tonnes of LNG per year on a delivered ex-ship basis over ten years. The value of the deal remains unknown, but the Australian player has called it “major”.

Additionally, the two companies intend to join forces in exploring carbon sequestration and e-methane avenues to reduce carbon emissions across their portfolios.

Kevin Gallagher, Santos Managing Director and Chief Executive Officer, remarked: “This SPA is a significant step in developing Santos’ equity LNG portfolio and establishes a long-term relationship with Hokkaido Gas, a Japanese gas utility providing natural gas within the Hokkaido region of Japan.”

“Our agreement with Hokkaido Gas demonstrates Santos’ commitment to providing reliable, competitive energy supplies to support our valued customers in Asia. We also look forward to working together to explore CCS and e-methane opportunities to support Japan’s and Santos’ decarbonisation targets.”

Gallagher further noted that the contract is in line with his company’s strategy to maintain long-term LNG pricing and shows the value of its portfolio, illustrating the strong demand for high-heating value LNG from projects such as Barossa and PNG LNG.

While the work on the Santos-operated Barossa gas field offshore Australia was stopped following an interim injunction issued by the court, the case was dismissed in January, enabling Allseas to resume pipeline installation activities in April.

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This January, the energy giant sold a 2.6% participating interest in the PNG LNG project in Papua New Guinea to Kumul Petroleum. Operated by ExxonMobil PNG, this integrated development is commercializing the gas resources of Papua New Guinea.

Apart from the abovementioned trio, the remaining co-venturers in the project are JX Nippon Oil & Gas Exploration and Mineral Resources Development Company (MRDC).