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Santos Ltd (ASX:STO) has announced a significant expansion in its liquefied natural gas (LNG) sales agreements, securing a deal to supply 19 LNG cargoes to Glencore (LSE:GLEN) in Singapore. This agreement marks the second substantial LNG sales contract for Santos in just over three months, reflecting strong and growing demand for LNG in international markets.
Under the terms of the agreement, Santos will supply approximately 500,000 tonnes of LNG per year, starting from the December quarter of 2025 and continuing for a period of three years and one quarter. The price of the LNG will be indexed to crude oil prices, a standard practice that aligns the cost of the fuel with fluctuations in the global oil market.
The LNG supplied under this contract will be drawn from Santos’ diverse global portfolio, which includes several major projects. These projects comprise PNG LNG in Papua New Guinea and GLNG in Gladstone, Queensland. Additionally, Santos is set to resume exports from Darwin LNG once its Barossa gas project in the Timor Sea becomes operational, which is anticipated in the September quarter of 2025. The Barossa project will contribute to the LNG supply under the new deal with Glencore.
This new agreement with Glencore, a notable player in the LNG trading sector, follows Santos’ earlier contract with Japan’s Hokkaido Gas, signed in late May. The ten-year deal with Hokkaido Gas also underscores the robust and sustained demand for high-quality LNG, particularly from projects like Barossa and PNG LNG, which are known for their significant heating value.
Santos CEO Kevin Gallagher emphasized the continued strong demand for high heating value LNG in Asia, which is driving these new agreements. He noted that both the Barossa and PNG LNG projects are well-positioned to meet this demand, further strengthening Santos’ market presence and revenue streams.
Despite the positive outlook for Santos’ LNG operations, the company's shares experienced a 3.3% decline to $7.02 in mid-afternoon trading. This drop is part of a broader trend affecting the oil and gas sector, which has been weighed down by recent decreases in crude oil prices.
Santos’ latest agreement with Glencore signifies a strategic expansion of its LNG sales and highlights the ongoing global demand for LNG, which remains a critical component of the energy mix.
