Santos Ltd has signed a preliminary agreement to supply liquefied natural gas (LNG) to a South Korean industrial customer and another preliminary deal to offtake from the proposed Ksi Lisims LNG in Canada for the Asian market.
Under a heads of agreement (HOA) with POSCO Steel Co Ltd, Australia’s Santos would supply LNG for 10 years, to be delivered “ex ship”.
“LNG would be sourced from Santos’ diversified global LNG portfolio, with supply commencing in 2030 or 2031”, Santos said in a press release.
Santos also announced a heads of agreement with Western LNG to buy about one million metric tons per annum (MMtpa) of LNG for up to 20 years from the British Columbia project. Deliveries, “free on board”, would begin 2031.
“The Ksi Lisims LNG supply is complementary to Santos’ existing LNG portfolio across Papua New Guinea and Australia, and would provide Santos with the ability to grow LNG sales volumes without a corresponding increase in upstream capital investment; increase long-term supply flexibility for existing and future customers across Asia; diversify Santos’ LNG supply base geographically with competitive cost of supply Canadian LNG having a secure, relatively short shipping route to premium north Asian markets; optimize volumes across the portfolio balancing market conditions, customer requirements and regional pricing opportunities”, Santos said.
“We see significant potential to build on these relationships over time, including by supporting the energy security and decarbonization goals of customers across the region”, Santos managing director and chief executive Kevin Gallagher said.
With a capacity of 12 MMtpa, Ksi Lisims LNG is expected to become operational 2029. It would rise on Indigenous land about nine miles west of the Gingolx village, a location supporting integration with proposed pipeline routes and access to overseas markets, according to the joint venture. Ksi Lisims LNG is a partnership between the Nisga’a Nation, Rockies LNG Partners and Western LNG. Western LNG has been designated future operator.
Ksi Lisims LNG said June 9 it had executed “benefits agreements” with Indigenous groups that help clear the path for investors to greenlight the project by yearend.
“The level of interest we are seeing from leading global energy companies like Santos reflects a growing global role for reliable, low-carbon Canadian LNG”, Western LNG founder, president and chief executive Davis Thames said separately.
“This HOA is a strong signal of confidence in our project as we move into the final stages of commercialization and toward a final investment decision”.
Ksi Lisims has definitive agreements with Britain’s Shell PLC, France’s Totalenergies SE and Germany’s state-owned Uniper SE for a total of six MMtpa.