Santos’ GLNG plant to stop buying Australian domestic gas for export by 2027
Santos' Gladstone Liquefied Natural Gas (GLNG) plant in Australia will stop buying gas produced for domestic use to meet export contracts by 2027, its CEO said on Tuesday, which could ease supply shortfalls on the country’s east coast.
GLNG CEO Stephen Harty said the company was spending about A$1 B ($650 MM) a year to develop its own tenements and build its own supply, and would eventually cease all domestic gas purchases.
“We've been on a path to phase out purchases for some time, and, in fact, we've been very successful with that. We've reduced our purchasing by 40% over the last five years,” Harty told the Australian Financial Review Energy and Climate Summit in Sydney. “By 2027, the only gas that we'll be exporting is the gas we produce around our own equity tenements and gas that has been specifically drilled and developed for GLNG by our strategic partners.”
Australia exports far more gas than it consumes, but its major reserves are located mostly in the northwest, a long way from the populous southeast, which is facing shortfalls as output declines from its mainstay gas source.
GLNG, one of three LNG export plants on the east coast, has long been criticized for siphoning gas out of the southeastern market to help meet its LNG export contracts.
Lily D’Ambrosio, the energy minister of Australia’s Victoria state, told the same conference there was “absolutely evidence” LNG exporters were using domestic gas to meet overseas contracts.
“It is crazy. It is really crazy,” she said. “Don't pretend you're actually doing the country a favor when you're actually causing massive price spikes for gas that is produced for domestic consumption.”
Harty said it was “a bit of a stretch” to blame everything on one project.
“The reality is there's been a market failure, there’s been a policy failure,” he said, adding he would support a gas reservation scheme, currently under consideration by Australia’s government as part of a wide-ranging review of gas market policies.
“The most important thing for us is that it is prospective in nature, which means that it doesn't interfere with our operation of our existing gas developments and honoring our existing export arrangements.”
GLNG is owned by Santos, Malaysia's Petronas, France's TotalEnergies and South Korea's KOGAS.
($1 = 1.5389 Australian dollars)
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