Santos has signed a binding long-term LNG Supply and Purchase Agreement (SPA) with Diamond Gas International Pte Ltd (DGI), a wholly-owned subsidiary of Mitsubishi Corporation (Mitsubishi), for the provision of LNG from the Barossa challenge.
The long-term SPA is a contractual dedication for the provision and buy of 1.5 million tonnes every year of Santos fairness LNG from Barossa for a interval of ten years with extension choices, at a value primarily based on the Platts Japan Korea Marker (JKM). Santos additionally has choices to pursue additional LNG transactions by means of industrial flexibilities negotiated with DGI.
Santos Managing Director and Chief Executive Officer Kevin Gallagher mentioned the settlement with DGI was one other important step in direction of a last funding choice on Barossa, which is focused for the primary half of 2021.
“Barossa is a globally-competitive, low-cost brownfield LNG challenge offering new provide right into a tightening LNG market, the place JKM-based pricing is an more and more deep, liquid and versatile marker for each sellers and consumers.
“The SPA delivers a agency LNG offtake association which represents over 80 per cent of Santos’ fairness LNG quantity from the Barossa challenge at our anticipated 50 per cent curiosity stage following the beforehand introduced sell-down to JERA, whereas the JKM-indexation gives portfolio stability to our current oil-linked LNG offtake agreements from GLNG and PNG LNG.
“It additionally represents the primary Santos long-term fairness LNG sale from one in all our main LNG initiatives, demonstrating our advertising and marketing functionality to satisfy buyer wants available in the market,”
Mr Gallagher mentioned.
Executive Vice President, CEO, Natural Gas Group of Mitsubishi Jun Nishizawa mentioned the settlement is a major milestone for each corporations and that it’s going to create a mutually useful relationship which is able to canvas not solely the LNG section but in addition numerous different enterprise alternatives together with ESG initiatives going ahead.
In addition to the long-term SPA, Santos and Mitsubishi Corporation have signed a Memorandum of Understanding to collectively examine alternatives for carbon impartial LNG from Barossa.
These embrace collaborating on alternatives referring to Santos’ Moomba carbon seize and storage (CCS) challenge, pursuit of carbon impartial LNG, bilateral agreements for carbon credit and potential future improvement of zero emissions hydrogen.
Santos’ Moomba CCS challenge is FID-ready and could have the capability to securely and completely retailer 1.7 million tonnes every year of CO2 deep underground in depleted pure fuel reservoirs, topic to authorities approval relating to eligibility for Australian Carbon Credit Units.
Santos at present holds a 62.5% operated curiosity within the Barossa three way partnership together with companion SK E&S (37.5%). Santos can also be a three way partnership companion and operator in Darwin LNG with a 68.four% curiosity.
Completion of the deliberate sell-downs to SK E&S and JERA, introduced in early 2020, will see Santos’ pursuits in Darwin LNG and the Barossa challenge change to 43.four% and 50%, respectively. The sell-downs are topic to customary consents, regulatory approvals and FID on Barossa.
(Source: Santos)

The submit SANTOS AND MITSUBISHI SIGN LONG-TERM AGREEMENT FOR BAROSSA LNG SUPPLY appeared first on Energy Global News.

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