Santos' GLNG facility will stop purchasing Australian domestic gas by 2027
Santos' Gladstone Liquefied Natural Gas plant (GLNG) in Australia will cease buying gas produced domestically to meet export contracts, according to its CEO on Tuesday. This could help ease the supply shortages on Australia's east coast.
GLNG's CEO Stephen Harty stated that the company spent about A$1billion ($650m) a year on developing its own tenements, building its own supply and eventually would cease all domestic purchases of gas.
"We have been on the path of phasing out purchases for a while, and we've had great success with it." Harty said that we've cut our purchases by 40% in the last five year at the Australian Financial Review Energy and Climate Summit.
By 2027, we will only be exporting gas produced around our equity tenements as well as gas developed specifically for GLNG (by our strategic partners).
Australia exports more gas than the country consumes. However, its largest reserves are in the northwest. This is a far cry from the southeast, where the population is experiencing shortages due to the decline of its main gas source.
GLNG is one of three LNG plants on the East Coast. It has been criticized for syphoning gas from the Southeast to meet its LNG contracts.
Lily D'Ambrosio is the energy minister for Victoria, Australia's state. She told the same conference that there was "absolutely proof" that LNG exporters used domestic gas to fulfill overseas contracts.
"It's crazy." She said, "It is crazy." Don't pretend that you are doing the country a favor when you actually cause massive price spikes in gas produced for domestic use.
Harty said that it would be "a stretch" to put all the blame on a single project.
He said that there had been a failure in the market and a failure of policy. He added that he would be supportive of a gas reserve scheme being considered by Australia's Government as part of an extensive review of policies governing gas markets.
The most important thing to us is the fact that this is a prospective agreement, meaning that it does not interfere with our current gas development and our current export agreements.
GLNG's owners include Santos, Malaysian Petronas (Petronas), France's TotalEnergies, and South Korea's KOGAS. (1 Australian dollar = 1.5389 dollars) (Reporting and editing by SonaliPaul in Sydney, Christine Chen)
(source: Reuters)
