Brickworks signs gas supply deal with Santos

Building products group Brickworks has secured a long term supply of gas with an agreement to extend its current supply agreement with South Australian producer Santos for another 11 years.

According to an announcement the agreement will provide long-term security of affordable gas for Brickworks industrial sites and support Santos’ investment in more gas supply for the east coast market.

Santos CEO Kevin Gallagher said the company would supply up to 35 petajoules of natural gas at ‘competitive, stable, CPI-linked prices for 11 years from 2025′, with an option to further extend the contract.

Gallagher said: “As the largest brickmaker, Brickworks has more than 1,100 employees in Australia producing around 500 million bricks per annum on the east coast, or enough to build approximately 50,000 houses.

“This deal locks in affordable, reliable, long-term gas supply security for this important supplier of building materials,”

Industrial companies have been unable for several years to secure supplies of affordable gas on a long term basis.

An extreme case involves explosives and fertiliser company Incitec Pivot which was unable to source gas and was forced to close down its Gibson Island, Brisbane urea plant at a time of fertiliser shortages.

Gallagher said: “The deal is important to Santos because it provides long-term cash flows that will support our ability to fund future drilling and development in the Cooper Basin, Eastern Queensland, and at Narrabri, which will bring desperately needed new gas supplies to the east coast domestic market.

“The deal provides critical energy security to Brickworks and the broader construction industry because it has no technically or economically feasible option on the horizon for electrification or conversion to zero-emission fuels such as hydrogen, so that without gas these products would not be able to be manufactured here in Australia.”

Santos’ Narrabri project could supply half the natural gas used in NSW homes and businesses, but is highly controversial as it involves fracking.

“Santos’ Narrabri Gas Project is 100 per cent committed to the domestic gas market and is a vitally important project to free up Cooper Basin gas for South Australian customers and increase gas supply for east coast customers, particularly in New South Wales.

“The Hunter Gas Pipeline is just as important to get Narrabri gas to market and potentially provide a second pathway to move Queensland gas south.

“If governments are serious about getting gas prices down, they must allow the private sector to get on with the job of bringing more gas supply to market and all governments should have their shoulders to the wheel to remove barriers and accelerate investment in these projects.”

Picture: Santos/Narrabri project