Australia’s Santos inks two LNG supply deals

Australian LNG developer Santos (ASX: STO) has agreed to LNG supply deals with South Korea’s POSCO Steel (KRX: 005490) and US-based Western LNG, Reuters reported on September 16.

Under the terms of the deal, Santos will provide super-chilled fuel to Korea’s biggest steelmaker on an ex-ship basis with the deal running for 10 years. The amount of supply Santos will provide was not disclosed. Supply will begin in 2030 or 2031.

Meanwhile, Santos also announced that it will buy around 1mn tonnes per year (tpy) of super-cooled gas from Western LNG’s planned Ksi Lisims LNG export terminal in British Columbia, Canada.

The contract runs for 20 years and will begin around 2031 running for up to 20 years. The LNG will be delivered on a free-on-board basis.

The agreement marks another 20-year offtake deal for the $10bn Ksi Lisims LNG project, which is being developed in a partnership between Rockies LNG, Western LNG, and the Nisga’a Nation. Ksi Lisims LNG has also inked similar length deals with German firms Securing Energy for Europe (SEFE) and the utility Uniper (XETRA: UN01). 

The proposed 12mn tpy floating LNG project is expected to be completed in 2029.

For Santos, the deals help diversify the company’s global LNG portfolio at a time when companies are increasingly seeking to diversify to reduce the impact of external shocks in the wake of the Middle East conflict between the US, Israel, and Iran.

Earlier in September, the Australian oil major also agreed to acquire an additional 3.3% stake in the Papua LNG project from French supermajor TotalEnergies (NYSE: TTE) for a cost of about $189mn.

The transaction will lift Santos’ stake in Papua LNG to 21% and increase its expected equity.