Australia's Santos lays out steps to boost domestic gas supply

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A sign for Santos Ltd is displayed on the front of the company's office building in the rural township of Gunnedah, located in north-western New South Wales in Australia, March 9, 2018. Picture taken March 9, 2018. REUTERS/David Gray/File Photo

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SYDNEY, June 5 (Reuters) - Australian gas producer Santos Ltd (STO.AX) said on Sunday it is taking steps, along with its joint venture partner Beach Energy (BPT.AX), to increase domestic supply of the energy resource, as Australia faces soaring prices of wholesale power and gas.

The measures, which include bringing a fifth drilling rig into the Cooper Basin and optimising well connections, aim to deliver an extra 15 terajoules of gas per day by the end of the year, Santos said in a statement. It said the company will spend more than $300 million in the basin this year.

“This investment will deliver more gas to the domestic market, which is desperately needed," Santos Chief Executive Kevin Gallagher said in the statement.

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Australia's new energy minister, Labor's Chris Bowen, vowed last week to take action necessary to ensure reliable and affordable energy supply amid a "perfect storm" that has sent domestic wholesale prices of power and gas soaring. read more

“Recent domestic gas supply and price pressures have been caused by a spike in gas-fired power generation to back up renewables and to replace the 30% or more of coal-fired

power generation that has been offline or not operating since early May," Gallagher said.

The announcement comes after Santos said last week it entered into a new agreement with a unit of Yara International (YAR.OL) to supply natural gas to the Norwegian company's liquid ammonia plant in Western Australia.

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Reporting by Samuel McKeith; Editing by Muralikumar Anantharaman

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