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:

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.''

Worker on a laptop at an oil and gas pipeline.

Image source: Getty Images

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

Time to sell written on a clock.
Broker Notes

Sell alert! Why this expert is calling time on Karoon Energy and Santos shares

A leading analyst delivers his verdict on Karoon Energy and Santos shares.

Read more »

A man and a woman sit in front of a laptop looking fascinated and captivated.
Energy Shares

3 key takeaways from Woodside's first-quarter result

From strong asset reliability to improving pricing, this update highlights what is really driving performance beneath the surface.

Read more »

A service station attendant crosses his arms and smiles towards the camera with a backdrop of petrol bowsers and a drive-through facility.
Energy Shares

Ampol shares surge 50% to a two-year high: Buy, sell or hold?

Find out what upside analysts are tipping for Ampol shares next.

Read more »

A female coal miner wearing a white hardhat and orange high-vis vest holds a lump of coal and smiles.
Energy Shares

ASX 300 coal stock lifting off today on production rebound

The ASX coal miner is recovering strongly from a wet start to the new year.

Read more »

An oil worker in front of a pumpjack using a tablet.
Energy Shares

Up 40% in 2026: Why are Woodside shares charging higher today?

This energy giant outperformed expectations during the first quarter.

Read more »

An oil worker assesses productivity at an oil rig as ASX 200 energy shares continue to rise.
Energy Shares

Woodside Q1 2026 earnings: Revenue grows, Scarborough and Trion progress

Woodside's Q1 2026 earnings highlight rising revenue and project progress, with reliable energy operations amid challenging weather conditions.

Read more »

A man looking at his laptop and thinking.
Energy Shares

Should you buy, hold, or sell Beach Energy shares after its update?

Let's see what analysts think of this energy producer this week.

Read more »

A woman wearing a hard hat holds two sparking wires together as energy surges between them.
Share Market News

Origin Energy shares slump 10% this week: Buy, sell or hold?

The ASX energy company has hit some headwinds. How much longer can they continue?

Read more »