Oil and gas group Santos Ltd says it has signed an agreement to supply gas to its newly approved Gladstone Liquefied Natural Gas (GLNG) plant in Queensland.
Santos said on Monday the deal involved supplying 750 petajoules of gas over 15 years from 2014, mainly from Santos’s uncontracted Cooper Basin P2 reserves.
The price will be linked to crude oil prices, Santos said.
Santos chief executive officer David Knox said the agreement delivered “significant value” to Santos’s Cooper Basin interests “by opening an export channel for Cooper gas and accelerating its monetisation”.
“The oil-linked pricing will underwrite future investment in the Cooper Basin and unlock the potential of the Basin’s remaining substantial resources,” Knox said.
“For some time, Santos and our partners in the Cooper Basin have highlighted the enormous potential of infill drilling and unconventional gas if a sufficiently attractive price could be established.
“This deal achieves that,” Knox said.
Santos has a 66.6 percent interest in the South Australian Cooper Basin Joint Venture. The other participants are Beach Energy (20.21%) and Origin Energy (13.19%).
Beach Energy said on Monday it was engaged in talks with Santos about participation in the deal.
Gladstone LNG is 45 percent owned by Santos while Malaysia’s Petronas holds 35 percent and France’s Total holds 20%.
State-run Korea Gas Corp (KOGAS) is in talks with Santos to become a gas buyer and investor in Gladstone LNG, according to sources.
The government’s approval of GLNG came with more than 300 conditions to protect the environment, particularly water supplies, but Santos has said it will go ahead with the project.