Santos firms up customer support for major Narrabri gas project

Santos says there is strong domestic demand for gas from its New South Wales project.

| More on:
Worker on a laptop at an oil and gas pipeline.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Key points

  • Santos has signed an agreement to supply Orica with gas from Narrabri
  • The deal is subject to Santos signing off on the major development
  • The announcement follows an earlier agreement announced with ENGIE

Santos Ltd (ASX: STO) has signed a second major supply deal for gas from its Narrabri project in New South Wales, saying the non-binding deal with Orica Ltd (ASX: ORI) and an earlier deal with ENGIE demonstrate the strong market interest in gas from the project.

Under the deal with chemicals maker Orica, Santos would supply up to 15 petajoules of gas per year for up to 10 years, the company said.

Santos and Orica will also explore decarbonisation activities through Santos' third-party carbon management business. The supply of Narrabri gas is subject to Santos making a final investment decision on the Narrabri Gas Project, negotiation and execution of a binding gas supply agreement, and each party obtaining internal and regulatory approvals.

Santos managing director Kevin Gallagher said this week that the agreement built on a previously announced memorandum of understanding with ENGIE.

"East coast energy users are calling for more gas supply sources to provide competition, price certainty and supply reliability,'' Mr Gallagher said.

"There is overwhelming demand for Narrabri gas and Santos is looking to execute foundation contracts as soon as possible to support development once regulatory and native title processes are concluded.''

Gas earmarked for Australia users

Santos in 2020 committed 100% of the gas to flow from the Narrabri project to the domestic market, amid concerns over the sale of Australian gas to overseas buyers.

"This is a strategic project that now needs Santos, along with state and federal governments putting our shoulders to the wheel and working together to make it happen,'' Mr Gallagher said.   

Motley Fool contributor Cameron England has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Energy Shares

A worker with a clipboard stands in front of a nuclear energy facility.
Energy Shares

Best 3 ASX 200 uranium shares of 2025

Uranium shares flourished as nations adopted policies for locally-produced nuclear power.

Read more »

A man sees some good news on his phone and gives a little cheer.
Energy Shares

Should you buy Paladin Energy shares after its strong update?

Bell Potter has upgraded its valuation for this high-flying uranium stock.

Read more »

Oil worker giving a thumbs up in an oil field.
Energy Shares

Santos shares increase on strong quarterly cash flows

Let's take a look.

Read more »

Oil worker using a smartphone in front of an oil rig.
Energy Shares

What's Bell Potter's view on Beach Energy shares after its 9% production dip?

How does the broker view this stock after yesterday's report?

Read more »

A man wearing a suit holds his arms aloft, attached to a large lithium battery with green charging symbols on it.
Energy Shares

Up 10% in a month. Is this ASX lithium stock finally back on track?

Vulcan shares rise after successful production testing at its flagship Lionheart lithium project.

Read more »

Worker on a laptop at an oil and gas pipeline.
Energy Shares

Beach Energy shares trade higher despite production slip

Weaker oil prices have taken their toll.

Read more »

A young man punches the air in delight as he reacts to great news on his mobile phone.
Energy Shares

Why are Paladin Energy shares jumping 12% to a 52-week high?

This uranium producer is jumping on Wednesday. Let's find out why.

Read more »

Oil industry worker climbing up metal construction and smiling.
Energy Shares

Down 22% with 6% yield: Are Santos shares a serious buy?

Brokers are generally upbeat and expect 20% upside.

Read more »