Australia’s Santos seals long-term LNG SPA with Japan’s Hokkaido Gas

Australian LNG player Santos will supply liquefied natural gas to Japan’s gas utility Hokkaido Gas under a long-term deal revealed on Tuesday.

Under the sales and purchase agreement, Santos will deliver up to about 0.4 million tonnes per annum of LNG to Hokkaido for 10 years, starting in 2027, according to a statement by Santos.

The volumes will be supplied from Santos’ LNG portfolio on a delivered ex-ship basis.

Hokkaido Gas and Santos also intend to collaborate to explore carbon sequestration and e-methane opportunities to reduce carbon emissions across their respective portfolios.

Santos boosting equity LNG portfolio

Santos managing director and CEO Kevin Gallagher said the contract “is consistent with Santos’ strategy of maintaining long-term LNG pricing and demonstrates the value of Santos’ high-quality LNG portfolio.”

He said this agreement further demonstrates the “strong” demand for high heating value LNG from projects such as Barossa and PNG LNG.

“This SPA is a significant step in developing Santos’ equity LNG portfolio and establishes a long-term relationship with Hokkaido Gas, a Japanese gas utility providing natural gas within the Hokkaido region of Japan,” Gallagher said.

Last month, Santos said the Barossa gas project, which will supply feed gas to the Santos-operated Darwin LNG plant, is more than 70 percent complete and “on track” for first production in the third quarter of 2025.

Santos currently has a 42.5 percent stake in the PNG LNG export plant in Caution Bay following the Oil Search merger, and it agreed earlier this year to amend the terms of sale of its 2.6 percent stake in the LNG project to Papua New Guinea’s national oil and gas company Kumul Petroleum.

The company operates the Gladstone LNG export plant on Curtis Island near Gladstone.

Ishikari LNG terminal

Hokkaido Gas said in a separate statement that it will receive a total of about 3.5 million tonnes of LNG under the 10-year contract.

Also, the volumes will be delivered to the Ishikari LNG import terminal located on Hokkaido, Japan’s second-largest island.

The Ishikari LNG terminal launched in 2012 with one 180,000-cbm storage tank followed by the second 200,000-cbm tank in 2016.

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