Santos to supply gas to Alcoa in Western Australia

Santos has sealed a deal to supply gas to Alcoa, the biggest gas user in Western Australia, notching up a new customer for gas from its John Brookes field in the Carnarvon Basin.

The deal is for the supply of 82 petajoules of gas to Alcoa over an initial five year period, with the ability for the contract to be extended by mutual agreement for another 10 years in two separate extensions.

Santos didn’t comment on the pricing terms, but Western Australia & Northern Territory general manager Brett Woods described the deal as “significant” for Santos and signalled it could lead to further similar deals.

“I am confident it will set the foundation for a long, fruitful association between the two companies allowing for other gas supply opportunities to be explored,” Mr Woods said in a statement.

In Western Australia, Alcoa operates the Kwinana, Pinjarra and Wagerup refineries, as well as the world’s largest bauxite mine at Huntly, near Dwellingup, and the Willowdale mine east of Waroona. The US aluminium giant on Friday announced a review for a chunk of its global refining and smelting capacity as it seeks to reduce costs and improve its global competitiveness. It already closed its Point Henry smelter in Victoria last year.

Santos also has a review of some of its assets also under way as it considers divestments to strengthen its balance sheet after the slump in crude oil prices in the December half. Some analysts have suggested some of its WA permits and fields may be candidates for sale.

Meanwhile, in Queensland, Santos reported another milestone at its $US18.5 billion GLNG liquefied natural gas project under construction in the state’s central south, with the arrival of gas at its Curtis Island processing plant in Gladstone.

The gas, which has been brought to Gladstone by pipeline from the GLNG coal seam gas fields in the Surat Basin, will be initially used to fire a gas turbine generator for the process to start up the LNG project. Gas will be processed and liquefied at the Island before being shipped to customers in Asia, with LNG exports due to commence in the December half.

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