Santos GLNG and QGC sign gas interconnect deal

Santos GLNG and QGC today signed an agreement that will see them share gas infrastructure, reducing supply risks to both of the Curtis Island LNG projects.

The deal will see both projects’ major pipelines connected in two places – one on the western side of The Narrows Crossing near Mt Larcom in central Queensland, and one on Curtis Island.

Santos Vice President GLNG Downstream Rod Duke said the construction of the two interconnections will help both QGC and Santos GLNG to run their LNG plants as efficiently as possible.

“The interconnect points will enable gas to flow from one project to the other when necessary, for example to allow for LNG plant downtime and planned maintenance to occur without interrupting either project’s gas field operations,” Duke said.

“Having two interconnects provides additional flexibility over the lifetime of both projects. It gives more options to the plant operators for moving gas.

“Ultimately it means the two companies will be able to buy, sell and swap gas at these points during scheduled and unscheduled events, therefore maximising plant productivity.”

Construction of the two interconnect points on adjoining easements is expected to be completed in 2014.

Duke said the agreement between the companies reflects how collaboration is important in the LNG market.

“The QGC and Santos GLNG agreement sets both projects up for the next 20 to 30 years and demonstrates our commitment to further enhancing co-operation between the two projects,” Duke said.

John Anderson, the head of Santos's operations in Western Australia and the Northern Territory, this week warned that a high-cost environment meant companies had to work more closely together.

"We need to start seeing more gas going through existing facilities," he said.

"That means there needs to be conversations around what are fair and reasonable commercial terms. But I think there's an enormous opportunity for Australia if it captures that issue of collaboration."

QGC’s $20 billion LNG plant on Curtis Island is the most advanced of the three projects being built and is due for completion in 2014.

The $16 Santos-led GLNG project is aiming to produce first gas in 2015.

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