POSCO and Santos have reached agreement on the key commercial terms for the long term supply of liquefied natural gas (LNG). The parties are continuing discussions with a view to starting deliveries in 2030 or 2031.
The final agreement is expected to be signed after negotiations on a sales and purchase agreement between the two companies and the completion of the necessary internal approval processes.
Under the planned supply arrangement, Santos will deliver LNG by ship to POSCO’s Gwangyang terminal in South Korea. Deliveries will be made on a DES basis, under which the seller is responsible for transporting the product to the designated port.
The agreement is planned to cover a period of 10 years, while details on annual supply volumes and pricing were not disclosed.
LNG to be used in low carbon steel production
Through the agreement, POSCO aims to establish a stable and competitive energy supply system. The company plans to use LNG as a transitional energy source in the medium and long term as it moves toward low carbon steel production processes.
POSCO stated that the long term partnership with Santos will support its transition toward low carbon production and its carbon reduction target for 2050.
Santos CEO Kevin Gallagher said the company was pleased to establish a long term partnership with a global steelmaker such as POSCO and would work to provide reliable and competitive LNG supplies.
Santos also reaches agreement to purchase LNG from Canada
During the same period, Santos signed a separate preliminary agreement to purchase 1 million mt/year of LNG from the Ksi Lisims LNG project being developed by Western LNG in British Columbia, Canada.
The agreement is planned to run for up to 20 years, with supplies expected to begin around 2031. Under the FOB terms, Santos will take delivery of the LNG at the loading port and will be responsible for transportation after loading.
Ksi Lisims LNG is planned as a floating LNG export facility with an annual capacity of 12 million mt. The project has not yet reached a final investment decision, and the agreement remains subject to the completion of a binding sales and purchase agreement.
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