Santos has entered a non-binding memorandum of understanding (MoU) with Engie, signalling a potential supply of natural gas from the Narrabri Gas Project to the Australian east coast domestic gas market.

This agreement could see up to 20 petajoules (PJ) per year being supplied for at least ten years following the project's commencement.

The proposed deal is contingent upon Santos' final investment decision (FID) on the Narrabri Gas Project, the negotiation and execution of a definitive gas supply agreement, and approvals from both parties.

Santos managing director and CEO Kevin Gallagher said: “Santos voluntarily committed 100% of Narrabri gas to the domestic market back in 2020. Santos already produces Narrabri gas from appraisal wells for the Wilga Park power station that generates electricity for the north-west NSW [New South Wales] grid.

“This experience, combined with our project development and production experience in Queensland’s Surat Basin, gives us confidence that Narrabri gas will be a very competitive source of domestic gas supply for the east coast market that is further advantaged by proximity to customers in NSW.”

Santos has been dedicated to developing the Narrabri asset since its acquisition in 2011, with more than A$1.5bn ($969.6m) invested thus far.

In addition to the supply agreement, Santos and Engie are exploring decarbonisation initiatives, particularly through Santos' carbon management business and the proposed Moomba phase two carbon capture and storage project.

“Narrabri will be subject to some of the strictest environment and groundwater protections in the world, and we will comply with them,” Gallagher added.

In related news, Santos has reached a significant milestone in its Pikka phase one project in Alaska, US, with the safe arrival of critical processing modules at Oliktok Point.

This development is a key step towards enhancing the company's growth and presence in the region.