PERTH Dec 19 Australia's Santos Ltd
has signed a second gas purchase agreement with rival Origin
energy to help supply its Gladstone liquefied natural
gas (LNG) export plant in eastern Australia, Santos company said
Origin will supply Santos with 100 petajoules (PJ) of gas at
oil-linked prices for five years beginning in 2016, adding to an
earlier agreement with Origin for a supply of 365 PJ over a 10
Under the agreement, Origin can supply an additional 94 PJ
of gas during the same five-year period.
The agreement comes amid some uncertainty about Santos'
ability to fully supply its $18.5 billion Gladstone plant with
"The key controversy for Santos remains whether the
underlying coal seam gas resource base and contracted third
party gas can meet supply obligation for two LNG trains," Neil
Beveridge, an analyst with Bernstein Research in Hong Kong said
in a note earlier this month.
"Based on experience from other CSG basins, we believe there
are risks of supply shortfall," Beveridge added.
In addition to its purchase agreements with Origin, Santos
also has purchase agreements for 750 PJ of gas over a 15-year
Santos owns 30 percent of the project, while Malaysia's
Petronas and Total own 27.5 percent each.
GLNG has binding offtake agreements with both Petronas and South
Korea's KOGAS for 3.5 mtpa over 20 years.
Gladstone LNG is one of three coal seam gas to LNG export
projects on Australia's eastern seaboard, with BG Group
bringing its Queensland Curtis Island LNG plant online in 2014
and Origin and ConocoPhillips' Australia Pacific LNG
bringing a plant online in 2015.