Australia has signed a new heads of agreement with the Gladstone LNG exporters to prevent a gas supply shortfall and secure gas for the domestic market.
The projects include the Santos-operated GLNG, the ConocoPhillips-led APLNG, and Shell’s QCLNG project.
Also, all of these LNG export plants all located on the Curtis Island off Gladstone and are the only LNG export facilities on Australia’s east coast.
Resources Minister Madeleine King signed the heads of agreement with the LNG exporters, according to a statement on Thursday.
“The negotiations ensure additional gas supply, improving security and affordability of domestic gas supplies in future years, while also introducing transparency measures to improve the information available to customers,” the statement said.
In July, the Australian Competition and Consumer Commission forecasted a gas shortfall of 56 petajoules (PJ) for the domestic market in 2023.
The new commitments from LNG exporters would lead to an extra 157 PJ for the domestic market in 2023, the statement said.
No impact on Santos or GLNG
In a separate statement, Australian LNG producer Santos welcomed the finalization of the heads of agreement released by the Australian government.
The firm said that the agreement “has no adverse impact” on Santos or the GLNG project.
Moreover, the deal ensures that LNG exporters would first offer uncontracted gas to the domestic market before international customers, according to Santos.
The LNG exporters have agreed to adhere to the principle that domestic gas customers would not pay more for the LNG exporters’ uncontracted gas than international customers, the firm said.
In addition, the agreement “removes sovereign risk by recognizing the importance of honoring LNG contracts and will help to maintain Australia’s reputation as a trusted and reliable LNG exporter to our trade and investment partners.”
Santos CEO Kevin Gallagher said the agreement “is a good outcome for Santos and very welcome to remove sovereign risk and ensure long-term LNG supply contracts are honored.”