Santos supply deal brings Narrabri coal seam gas project a step closer as NSW decision looms
Santos is pressing ahead with its controversial $3bn coal seam gas project as NSW decision looms.
Santos is pushing ahead with the development of its controversial $3 billion Narrabri coal seam gas project in NSW, cementing a deal with chemical producer Perdaman Group ahead of a decision by the state government on whether it will proceed.
The heads of agreement signed between the two companies today will kick off an initial engineering and design study for Perdaman’s proposed $2bn ammonia plant which will tap gas from Narrabri following an initial pact in February.
“The Narrabri gas project could produce enough gas to supply up to half NSW’s needs, with more and more manufacturers supporting it because they recognise the advantages of having a reliable and competitively-priced source of gas in NSW,” Santos chief executive Kevin Gallagher said.
Santos (STO) submitted its environmental impact statement for Narrabri in February 2017 to the NSW Department of Planning and Environment, which is reviewing the project before it proceeds to the state’s Independent Planning Commission.
The gas producer touts the development — which could supply half the state’s gas needs — as a solution to the tight east coast market, where users are struggling to strike deals at affordable prices.
Santos argues uncertainty over when it will receive a decision in the long-running regulatory process needs to be resolved to bring relief to the state’s struggling manufacturers and heavy industry and provide a cheaper option than looming LNG imports.
Perdaman threatened in May to pull $2bn of planned spending from the state as frustrations mount that delays approving Santos’ Narrabri project will cripple the viability of manufacturers’ investment pipeline.
Perdaman today backed Santos to proceed with the project.
“I hope the Narrabri gas project will proceed to a final investment decision as soon as possible to give certainty to this project and attract more to the region,” Perdaman managing director Vikas Rambal said. “If our plant goes ahead it will not only bring new jobs but competition, which is always good for prices, to the market in NSW and that will be good for farmers in the region.” Opponents of the development are concerned about the development’s potential impact on groundwater and the surrounding agriculture with the coal seam gas project receiving a record 23,000 submissions on its environmental impact statement.