Shell increases domestic supply

Shell’s QGC Joint Venture (JV) has signed two new gas sales agreements with large domestic customers as part of a push to ensure east coast gas supplies.

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

The first deal will see the supply of around 8 PJ of gas to Engie’s Pelican Point power plant in South Australia for five months over the peak period, which will help secure electricity contracts for industrial users.

The second deal is an 18-month agreement that will supply gas from Queensland’s Surat Basin to Orica’s Yarwun facility near Gladstone, which provides explosives and cyanide for the mining industry.

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

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

In order to meet local supply demands, Shell has reduced export volumes and hold the view that community acceptance of an LNG export industry depended on a reliable supply of gas to Australian customers.

“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,” said Ms Yujnovich.

The deals have been praised by the Australian Petroleum Production and Exploration Association (APPEA), saying the Queensland gas industry is doing its bit to address concerns about domestic 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,” said APPEA Queensland Director Rhys Turner.

“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.”

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