Oil & Gas

Australia's Santos has announced a long-term liquefied natural gas (LNG) agreement with Japanese utility company Hokkaido Gas. According to the Washington-based Specialized Energy Platform, the deal involves supplying up to 400,000 metric tons of LNG annually for a decade, beginning in 2027. Shipments will be sourced from Santos' project portfolio, delivered under the onboard delivery method, with the seller responsible for delivery to the agreed port, covering all costs and risks. The agreement also includes collaboration between the two companies on carbon capture and storage and synthetic methane initiatives to reduce their carbon footprints and achieve carbon neutrality.

Santos CEO Kevin Gallagher stated that the contract aligns with the company's strategy to secure long-term LNG pricing and to provide reliable and competitive cargoes to Asian customers. He emphasized that the agreement is a significant step in developing Santos' LNG portfolio and establishing a long-term relationship with Hokkaido Gas. This deal highlights the strong demand for Santos' high-value projects like Barossa and BNG, according to a press release on Santos' official website. In April 2024, Santos announced that the Barossa gas project was 70% complete, with production expected to commence in the third quarter of 2025.

On May 9, 2024, the Labour government introduced a new strategy supporting the development of new gas fields with measures to reduce emissions, including carbon capture and storage. Despite committing to carbon neutrality by 2050, the government acknowledges the necessity of gas until and beyond 2050 amid the global shift to cleaner fuel sources. Resources Minister Madeleine King stated, "It is clear that we will need to continue to explore, invest, and develop in the sector to support the path to carbon neutrality in Australia and our overseas partners, and to avoid gas supply shortages." The strategy comes after criticism of short-term measures to increase gas supplies and lower energy prices following the Russian-Ukrainian war in 2022.

As one of the world's largest LNG exporters, Australia provided a fifth of the world's LNG exports in 2023. Chevron and Australia's Woodside Energy in Western Australia contributed the most to these exports, according to a Reuters report monitored by the Specialized Energy Platform. Santos and Woodside face opposition from environmental activists against gas projects in northwestern Australia, while smaller companies encounter resistance to shale gas exploration in the Northern Territory. Carmel Vent, coordinator of the environmental group Lock the Gate, criticized the new strategy, stating that it promotes a reckless plan to open new gas basins, which would harm land, water, and communities.