Santos ties up with Orica for potential gas supply

Australian gas supplier Santos announced it has signed a non-binding MoU with Orica, Australian mining and infrastructure solutions provider, for potential domestic gas supply from its Narrabri Gas Project to Orica’s manufacturing network on the Australian east coast.

The Australian companies agreed to negotiate for up to 15 petajoules a year from the coal seam gas project in New South Wales for a period of up to ten years.

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 (FID) 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/CEO Kevin Gallagher said this builds on the previously announced MoU with Engie for up to 20 petajoules per year for ten years from the Narrabri project. French utility firm Engie committed 100% of the purchase to Australia, according to Santos.

Santos adds that East coast energy users are calling for more gas supply sources to provide competition, price certainty and supply reliability.

“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. Narrabri gas will be a very competitive source of domestic gas supply for the east coast market,” Gallagher said.

Santos voluntarily committed 100% of Narrabri gas to the domestic market. Narrabri gas from appraisal wells already supplies the Wilga Park power station that generates electricity for the northwest NSW grid. It expects the project to supply up to half of New South Wales’ gas needs. The company plans to gradually develop 850 wells.

However, the FID on the Narrabri project has been delayed. “Delays to bringing Narrabri gas to market have occurred as a result of a number of factors including government moratoriums, independent scientific reviews, delayed and lengthy approvals, legal appeals and native title processes,” Gallagher had said earlier on when announcing the MoU with Engie.

Santos has operations across Australia, Papua New Guinea (PNG), Timor-Leste and US.