Santos signs domestic gas deal

SANTOS has inked a deal with French power company ENGIE to supply gas to Pelican Point power station next year to help meet South Australia’s energy needs.

Scheduled to begin in January, the 15 Petajoule (PJ) contract would involve a mix of Gladstone LNG (GLNG) and Santos portfolio gas.

The deal followed ENGIE’S announcement earlier this year it would complete a $40 million upgrade of the second unit’s turbine to return the power station to its full capacity of 479 megawatts (MW), along with a separate offtake deal with Origin Energy.

Santos managing director Kevin Gallagher said energy security for South Australia was a priority, and the ENGIE deal demonstrated the company’s willingness to work with its GLNG partners PETRONAS, Total and KOGAS, amid a looming east coast domestic gas shortage.

“It also shows we are working with the Turnbull Government to deliver affordable and reliable energy to all Australians, and as a leading domestic gas producer across this country, Santos is best placed to bring energy security to Australian households and businesses,” Mr Gallagher said.

“This agreement demonstrates that Santos is delivering for Australians, and that natural gas has a crucial role to play if Australia is going to have a balanced and pragmatic approach to energy policy.”

Australian Petroleum Production and Exploration Association (APPEA) chief executive Malcolm Roberts said the Santos announcement – which followed recent gas supply announcements from Shell and Origin – showed the gas industry was taking necessary steps to meet the needs of domestic customers.

“This ENGIE agreement, coupled with other actions the industry has taken since March, shows gas producers are delivering,” Mr Roberts said.

“It is absurd that we are talking about the possibility of a supply shortfall in 2019 when we have substantial resources in the Northern Territory, Victoria and New South Wales that could be developed.

“Some states need to decide whether they wish to be part of the problem or part of the solution.

“Santos’ announcement provides further evidence that market interventions, such as the Australian Domestic Gas Security Mechanism, are unlikely to be required.”

Mr Gallagher said Santos would announce further domestic supply contracts in coming months to support Federal Government efforts to improve energy security and prices for households and industry.

Image: ENGIE. Pelican Point power station is capable of catering for about 25 per cent of South Australia’s needs.