Santos has come under pressure from manufacturers demanding that it honours pledges to the domestic market in its $18.5 billion Gladstone Liquified Natural Gas (GLNG) export venture.
Complaints have been made after GLNG has been forced to buy domestic gas to make up a shortfall in the project, it has been reported in the AFR.
According to the AFR report, GLNG had expected to buy small volumes of gas for the export project but analysts are claiming that “rising field costs and underperforming wells” means it will “use third-party gas for almost half its production”.
Santos GLNG produces natural gas from Queensland’s coal seams and converts it into liquefied natural gas (LNG) for sale to world markets.
At a meeting of gas CEOs in Canberra called by Prime Minister Turnbull last week, GLNG and other Queensland-based LNG ventures were called on to ensure support for local customers.
GLNG’s environmental impact statement published in 2010 expressed it “is not diverting gas from local markets to export markets” and was “unlikely to contribute to a future shortage of gas in the domestic market”.
Ten contracts GLNG signed to buy gas from external wells were listed by Santos in December with some reportedly from Santos’ own gas production.
According to the project website, GLNG will have the capacity to produce 7.8 million tonnes of LNG each year.