Santos has signed an agreement with Mitsubishi subsidiary Diamond Gas for the supply of liquified natural gas (LNG) from the Barossa project offshore the Northern Territory.
The long-term supply and purchase agreement (SPA) is a contractual agreement for the supply and purchase of 1.5 million tonnes per annum of Santos equity LNG from Barossa for a period of 10 years with extension options.
Santos managing director and chief executive officer Kevin Gallagher said the agreement with Diamond Gas was another step towards a final investment decision (FID) on Barossa, which is targeted for the first half of 2021.
“Barossa is a globally-competitive, low-cost brownfield LNG project providing new supply into a tightening LNG market, where, Platts Japan Korea Marker (JKM)-based pricing is an increasingly deep, liquid and flexible marker for both sellers and buyers,” Gallagher said.
“Santos is delighted to establish a long-term relationship with Mitsubishi, a major Japanese company with deep LNG expertise.”
The agreement marks the first Santos long-term equity sales from one of its major LNG projects, demonstrating its marketing capability to meet customer needs in the market.
Mitsubishi executive vice president, CEO Jun Nishizawa said the agreement was a milestone for both companies.
“The agreement will create a mutually beneficial relationship which will canvas not only the LNG segment but other business opportunities including ESG initiatives going forward,” Nishizawa said.
In addition to the agreement, Santos and Mitsubishi have signed a memorandum of understanding to jointly investigate opportunities for carbon neutral LNG from Barossa.
These include collaborating on opportunities relating to Santos’ Moomba carbon capture and storage (CCS) project, pursuit of carbon neutral LNG, bilateral agreements for carbon credits and potential future development of zero emissions hydrogen.
For more information subscribe to PPO.