Santos secures $100m gas supply contract with New Century Resources

Australian onshore gas operator Santos has signed an agreement to supply natural gas to New Century Resources, in a deal valued at $100m.

Pursuant to the agreement, Santos will deliver around nine petajoules (PJ) of portfolio gas over the next four years.

New Century will use the gas to generate electricity for its zinc mine near Mt Isa in Queensland.

Santos marketing and trading executive vice president Phil Byrne said: “The gas sales agreement we’ve reached is innovative in both its flexibility and pricing, making it commercially attractive for both parties.”

The agreement is in line with the company’s continuing focus on supplies to the east coast domestic gas market, bringing its total contribution so far this year to around 70PJ.

Byrne further added: “Santos is absolutely committed to working in partnership with the Australian industry to deliver competitively priced domestic gas and this is a great example of that commitment.”

In the wake of declining mature fields, the company noted that in order to ensure continued delivery of competitive gas for the Australian industry on the east coast, it needs access to new and existing supply sources.

In December last year, Santos and its GLNG partners reached a deal to deliver 15PJ of gas to Origin to cater to Australian household, industrial and power-generation customers.

Based on an interim report prepared by the Australian Competition and Consumer Commission (ACCC) last year, the east coast gas market is projected to experience a supply shortfall of up to 55PJ this year.

If the domestic demand increases further, then the shortfall could be as high as 108PJ, as per the report.