Santos Inks LNG Supply Deal with Glencore Singapore

Santos Ltd. has secured a mid-term liquefied natural gas (LNG) supply contract with Glencore Singapore Pte Ltd.

The contract is to supply 19 LNG cargoes, or up to approximately 0.5 million metric tons of LNG per annum over a period of 3 years plus one quarter, Santos said in a news release.

The contract will begin in the fourth quarter of 2025 with LNG being supplied from Santos’ global portfolio of world-class LNG assets on a delivered ex-ship basis.

Santos Managing Director and CEO Kevin Gallagher said that the contract with Glencore “is an extension of our existing strong business relationship and a great opportunity for both Santos and Glencore to leverage their expertise in Asian LNG markets”.

“This oil-indexed contract along with the recently executed long-term LNG Sales and Purchase Agreement with Hokkaido Gas in Japan demonstrates Santos’ strong LNG portfolio position and customer relationships in the region. There continues to be extremely strong demand in Asia for high heating value LNG from projects such as Barossa and PNG LNG. Santos is committed to supporting the energy security of our valued customers across Asia,” Gallagher added.

In May, Santos signed a binding long-term (LNG) supply and purchase agreement (SPA) with Japan-based Hokkaido Gas Co., Ltd. Beginning in 2027, approximately 0.4 million metric tons per annum of LNG for 10 years will be supplied through the SPA from Santos’s LNG portfolio on a delivered ex-ship basis, according to an earlier news release.

Hokkaido Gas and Santos also plan to collaborate and explore carbon sequestration and e-methane opportunities to reduce carbon emissions across their respective portfolios, according to the release.

State-owned Firm Joins Bayu-Undan JV

Meanwhile, Santos announced that the Bayu-Undan Joint Venture (BUJV) has agreed on the terms of a sales and purchase deed under which state-owned TIMOR GAP E.P. will acquire a 16 percent interest in the Bayu-Undan upstream project, effective July 1.

The transaction is expected to close in mid-September, Santos said in a separate statement. The financial details were not disclosed.

Further, the Production Sharing Contract (PSC) has been extended to June 30, 2026, which is the seventh extension to date.

The Bayu-Undan upstream project comprises the offshore petroleum field, and offshore production and processing facilities located in Timor-Leste. The Bayu-Undan field is located approximately 310.7 miles (500 kilometers) northwest of Darwin in Timor-Leste's offshore waters. The joint venture partners are Santos, SK E&S, INPEX, Eni and Tokyo Timor Sea Resources.

After the transaction, Santos will own a 36.5 percent interest in the project, SK E&S will own 21 percent, INPEX will own 9.6 percent, Eni will own 9.2 percent, and Tokyo Timor Sea Resources will own 7.6 percent.

The project has provided more than $25 billion in revenue for Timor-Leste over its life so far, according to the statement. More than half the offshore workforce at Bayu-Undan is Timorese with the project currently supporting about 350 onshore and offshore jobs in Timor-Leste. Bayu-Undan continues to produce gas into the Australian domestic market via a Gas Sales Agreement with the Power and Water Corporation of the Northern Territory, as well as producing valuable liquids.

Kevin Gallagher said the transaction demonstrates the company’s commitment to a long-term partnership with Timor-Leste in the development of the country’s petroleum resources.

“I have long wanted to see TIMOR GAP as a partner of Santos and I welcome them as a participant in the Bayu-Undan joint venture,” he remarked.

Santos said it remains committed to working with Timor-Leste and the joint venture to repurpose Bayu-Undan into a new large-scale, commercial carbon capture and storage project when petroleum production ends, which would create an ongoing source of revenue, local jobs and business opportunities for Timor-Leste by providing carbon management services to the Asian region.

To contact the author, email rocky.teodoro@rigzone.com