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.''
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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.
