Australian company Santos announced that it had signed a binding long-term liquefied natural gas (LNG) Supply and Purchase Agreement (SPA) with Diamond Gas International Pte Ltd (DGI) company which is subsidiary of Mitsubishi Corporation of LNG supply for the supply of LNG from the Barossa project., a press release reported.

According to the SPA, Santos will supply 1.5 million tons per annum of LNG from Barossa for 10 years with extension options at a price based on the Platts Japan Korea Maker (JKM). Additionally, Santos can conduct further LNG transaction through flexibilities negotiated with DGI.

Furthermore, the two companies have signed a Memorandum of Understanding (MoU) to jointly investigate opportunities for carbon neutral LNG from Barossa.

Santos’ CEO and Managing Director, Kevin Gallagher, said the agreement with DGI was another significant step towards a final investment decision on Barossa, which is targeted for H1 2021.

“The SPA delivers a firm LNG offtake arrangement which represents over 80 per cent of Santos’ equity LNG volume from the Barossa project at our expected 50 per cent interest level following the previously announced sell-down to JERA, while the JKM-indexation provides portfolio balance to our existing oil-linked LNG offtake agreements from GLNG and PNG LNG,” Gallagher added.