Santos Signs New Oz Gas Supply Deal

Australian oil and gas producer Santos has signed a new gas supply agreement with fellow Australian company Visy for its New South Wales (NSW) operations, which is set to begin at the start of next year, Santos said September 10.

“The new gas supply agreement with Santos provides certainty of gas supply in 2019 for our energy-intensive operations in NSW,” Visy chief operations officer Mark De Wit said.

Visy is a packaging, paper and resource recovery company.

Santos managing director and CEO Kevin Gallagher said Santos is committed to working with Australian industry to deliver competitively priced domestic gas.

“We’re drilling about 87 wells in the Cooper Basin this year – more wells in a single year since 2014. We’ve arrested production decline in the Cooper and production is actually growing again, which is great news for the east coast gas market,” he said.

Since 2015, the company has reduced completed well costs by 50% in Australia’s Cooper Basin and connected well costs by 84% in Queensland, which locks in its position as Australia’s lowest cost onshore gas developer, he said.

“Drilling more wells and lowering production costs – extracting more gas for less money – is the best way to keep downward pressure on gas prices. Santos is on track to supply about 70 PJ of gas to the east coast market in 2018, which is almost 13% of expected demand this year,” he added.

Santos also exports gas as LNG through its Gladstone LNG facility in Queensland. The company has come under pressure from the Federal Government to ensure the domestic market is adequately supplied or risk facing export curbs.