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Australian oil and gas producer Santos (ASX:STO) has solidified its presence in the Asian liquified natural gas (LNG) market through a newly signed contract with Glencore Singapore. The mid-term agreement will see Santos supply LNG cargoes amounting to up to 500,000 tonnes per annum (tpa) over a three-year period, starting from the fourth quarter of 2025.
Strengthening Business Relations with Glencore
Santos’ managing director and CEO, Kevin Gallagher, emphasized that this agreement is an extension of the company’s long-standing relationship with Glencore. The two companies will continue to leverage their expertise in the dynamic Asian LNG market. Gallagher noted that the oil-indexed contract underscores Santos' strong LNG portfolio position and its commitment to customer relationships across the region.
This agreement, alongside Santos' other major deals, demonstrates its ability to navigate the competitive LNG market. The contract with Glencore follows Santos' recent long-term LNG sales and purchase agreement (SPA) with Hokkaido Gas in Japan, reflecting the company's growing influence in the region.
Meeting Asia’s High LNG Demand
The contract with Glencore comes at a time when Asia is experiencing strong demand for high-heating value LNG, particularly from projects like Barossa and PNG LNG. Gallagher highlighted Santos' commitment to supporting energy security in Asia, which is a critical market for LNG suppliers due to its increasing energy needs.
The LNG cargoes delivered to Glencore will be sourced from Santos' extensive LNG assets and delivered on an ex-ship basis, ensuring reliability in supply and distribution. This contract further establishes Santos as a key player in the region’s LNG supply chain.
Strategic LNG Sales to Japan
Santos has also strengthened its position in Japan’s LNG market. In May 2024, the company signed a long-term SPA with Hokkaido Gas. This deal involves the annual supply of up to 400,000 tonnes of LNG over a ten-year period, set to commence in 2027.
The partnership between Santos and Hokkaido Gas goes beyond LNG sales. The agreement includes a collaborative effort to explore carbon sequestration and e-methane projects to reduce carbon emissions across both companies' operations. This aligns with the increasing focus on sustainability in the energy sector and reflects Santos' commitment to decarbonization initiatives.
