Australia’s Santos, Japan’s Hokkaido agree LNG deal

Australian independent Santos has signed a 10-year LNG supply and purchase agreement (SPA) with Japanese utility Hokkaido Gas with shipments starting in 2027.

The SPA will deliver around 400,000 t/yr from across Santos' portfolio on a des basis, which chief executive Kevin Gallagher described as a "significant step" in developing Santos' equity LNG portfolio and in keeping with the firm's strategy of maintaining long-term pricing. Santos is involved in the 6.9mn t/yr ExxonMobil-operated PNG LNG in Papua New Guinea (PNG) and Australia's 7.8mn t/yr Gladstone LNG in Queensland and the 3.7mn t/yr Darwin LNG in the Northern Territory.

The firms will also work together on carbon capture and storage and e-methane development to reduce greenhouse gas emissions across their respective portfolios, Santos said on 28 May.

Fellow Japanese gas firm Toho Gas is testing the use of e-methane as a feedstock for city gas as part of a three-year pilot to March 2027, producing 30,000 m³/yr by using biogas-based carbon dioxide (CO2) and hydrogen derived from clean electricity produced using LNG cold energy at the Chita LNG terminal in Aichi prefecture.

Japanese utility Tokyo Gas and pulp and paper firm Oji are planning another e-methane project for Hokkaido prefecture, as Japan's trade and industry ministry is aiming for e-methane to comprise 1pc of city gas volumes by 2030 and 90pc by 2050. E-methane is typically produced from renewable hydrogen and recycled CO2.

By Tom Major