Santos, Mitsubishi sign Barossa deal

Santos has signed a supply and purchase agreement (SPA) with a Mitsubishi Corporation subsidiary for the supply of LNG from Barossa.

The long-term SPA with Diamond Gas International (DGI) will see Santos supply 1.5 million t/annum of LNG for a period of 10 years at a price based on the Platts Japan Korea Marker (JKM).

Santos Managing Director and CEO Kevin Gallagher said the deal would assist Barossa in achieving a final investment decision in the first half of 2021.

“Barossa is a globally-competitive, low-cost brownfield LNG project providing new supply into a tightening LNG market, where JKM-based pricing is an increasingly deep, liquid and flexible marker for both sellers and buyers,” he said.

“The SPA delivers a firm LNG offtake arrangement which represents over 80 per cent of Santos’ equity LNG volume from the Barossa project at our expected 50 per cent interest level following the previously announced sell-down to JERA, while the JKM-indexation provides portfolio balance to our existing oil-linked LNG offtake agreements from GLNG and PNG LNG.”

Santos and Mitsubishi have also signed a memorandum of understanding to jointly investigate opportunities for carbon neutral LNG from Barossa, which Santos said includes collaborative efforts on the Moomba carbon capture and storage project, bilateral agreements on carbon credits and the potential development of hydrogen.

Santos currently holds a 62.5 per cent operated interest in the Barossa joint venture along with partner SK E&S (37.5 per cent).

For more information visit the Santos website.

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