Santos, Australia's gas supplier, signs a deal with Orica to supply Narrabri to Orica

Santos, Australia's second largest gas producer, announced on Thursday that it had signed an agreement to discuss a possible domestic gas supply contract from its Narrabri Gas Project located in New South Wales.

Santos will supply Orica with up to 15 petajoules per year and for ten years.

Kevin Gallagher, Santos managing director and chief executive officer, said that the memorandum of agreement highlights Santos’s interest in domestic supply from Narrabri. It builds on an earlier deal made with Engie's supply utility company in August.

A tribunal in Australia approved a project worth A$3.6 billion (2.38 billion dollars) earlier this year. The tribunal said that the increase in domestic energy supply was more important than concerns about the damage to Indigenous heritage sites or the impact on the climate.

The supply agreement is contingent on Santos completing the final investment decision for the project, negotiating and executing a binding gas agreement, as well as each party receiving internal and regulatory approvals.

Early trades showed Santos and Orica shares were largely in line with benchmark S&P/ASX 200 index.

(source: Reuters)