Australian oil and gas company Santos has announced that it has signed an agreement with AGL Energy for the purchase of 254 petajoules of gas supply to its GLNG project.
The company said that the gas will be delivered at Wallumbilla over a period of 11 years starting from January 2017, with pricing based on an oil-linked formula.
The gas will be sourced from coal seam gas fields in Queensland.
Vice President Downstream GLNG Rod Duke said the agreement with AGL will add to GLNG’s diverse gas portfolio.
“When combined with GLNG’s quality LNG off-take contracts with project partners PETRONAS and KOGAS, this supply portfolio delivers significant value to the project,” Mr Duke said in a statement.
“Since our first LNG cargo in October, ramp-up of LNG train 1 has progressed well with the train having already produced well above nameplate capacity. Six LNG cargoes have already been shipped to our customers.”
Mr Duke also said that commissioning work on GLNG’s second LNG train has already commenced, with the first LNG from train 2 scheduled for the second quarter of 2016.
AGL’s Executive General Manager Stephen Mikkelsen said the agreement to sell gas to GLNG demonstrates the value of AGL’s diverse east coast gas portfolio and the flexibility the portfolio has in order to meet the changing demands of the east coast Australian market.
“The agreement stands to deliver significant value and largely mitigates and oil price exposure under the Esso Australia – BHP Billiton contract in calendar years 2018 to 2020, announced earlier this year,” Mr Mikkelsen concluded.
The GLNG project is led by Santos, in partnership with three of the world’s leading energy companies – PETRONAS from Malaysia, Total from France, and KOGAS from South Korea.
When fully operational, the project will have the capacity to produce 7.8 million tonnes of LNG each year.