Shell seals more east coast domestic gas deals

gas

Shell’s QGC joint venture has announced two new gas sales agreements with large domestic customers.

The deals will see the JV supply gas for power generation in South Australia and manufacturing in Queensland.

Shell announced last week it would supply around 8PJs of gas to Engie’s Pelican Point power plant in South Australia for five months over the peak winter period to help secure electricity contracts to major industrial users.

An 18-month agreement will supply gas from Queensland’s Surat Basin gas fields to Orica’s Yarwun facility near Gladstone, which produces explosives and cyanide for the mining industry.

Shell chairman Zoe Yujnovich said supplying the Australian domestic gas market was an important part of Shell’s business in Australia.

“These new sales agreements come after significant contracts were signed with power generators and retailers,” Ms Yujnovich said.

“Together they bring QGC’s total domestic sales to about 11 per cent of east coast demand for 2017.

“Shell’s business on the east coast has reacted to the gas market and reduced export volumes to supply additional gas to the domestic market during 2017.”

Ms Yujnovich said Shell had long held the view that community acceptance of an LNG export industry depended on a reliable supply of gas to Australian customers – including factories and homes.

“Make no mistake the business I lead is pursuing further domestic supply agreements and has taken proactive steps to supply the east coast gas market,” she said.

APPEA Queensland Director Rhys Turner said the announcement should be a wakeup call to other state governments to act to bring on additional supply.

“The gas industry is committed to ensuring that additional gas is provided into the market. QGC’s latest contract means that its domestic sales now account for 11 per cent of east coast demand,” Mr Turner said.

“These new contracts – coupled with the recent announcement by QGC that it will soon start drilling up to 161 additional wells as part of its Project Ruby – show the industry is delivering on its commitments.”

Mr Turner said that Queensland was playing its part in solving the supply problem, but south-eastern states are still dragging the chain.

Shell’s QGC business is a net contributor to the domestic gas market and will sell more than 75PJs net of domestic gas purchases to customers in Australia this year.

This represents more than 10 per cent of east coast gas demand and 40 per cent of Queensland’s demand.