Australian gas producer Santos Ltd said it would be taking steps, along with its joint venture partner Beach Energy, to increase domestic LNG supplies, as Australia faces soaring prices of wholesale power and gas, Reuters reported.
The measures, which include bringing a fifth drilling rig into the Cooper Basin and optimising well connections, aim to deliver an extra 15Tj of gas per day by the end of the year, Santos said. The company will spend more than $300 million in the basin this year.
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“This investment will deliver more gas to the domestic market, which is desperately needed,” Santos CEO Kevin Gallagher said.
Australian energy minister Chris Bowen last week promised to take action necessary to ensure reliable and affordable energy supply amid a “perfect storm” that has sent domestic wholesale prices of power and gas soaring.
“Recent domestic gas supply and price pressures have been caused by a spike in gas-fired power generation to back up renewables and to replace the 30 per cent or more of coal-fired power generation that has been offline or not operating since early May,” Gallagher said.
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The announcement comes after Santos said last week it entered into a new agreement with a unit of Yara International to supply natural gas to the Norwegian company’s liquid ammonia plant in Western Australia.
Santos is Australia’s biggest domestic gas supplier, underpinned by a portfolio of liquefied natural gas (LNG), pipeline gas and oil assets. With its origins in the Cooper Basin, Santos has one of the largest exploration and production acreages in Australia and extensive infrastructure, and is committed to supplying the domestic markets.