Santos signs 10-year liquefied natural gas agreement with Hokkaido Gas Company

On 28 May 2024, Santos signed a 10-year liquefied natural gas (LNG) agreement with Hokkaido Gas Company. According to the terms of the agreement announced by both parties, Santos will supply 400,000 tonnes of LNG annually for 10 years, beginning in 2027. Hokkaido Gas Company is a Japanese natural gas provider operating in Hokkaido Prefecture. Santos is an Australian oil and gas company headquartered in Adelaide, with operations across Australia and internationally. Founded in 1954 as the South Australian Oil and Gas Corporation, it adopted the name Santos in 1975.

Prime Minister Marape pledges to resolve equity issues in the PNG LNG project and strengthen landowners’ interests

He emphasized that the review would not be limited to the 4.27% equity stake, but would instead form part of a broader assessment of the nation’s entire equity portfolio in the PNG LNG project—including the 16.57% stake held through Kumul Petroleum. He added: “This is a holistic review. We are examining the full structure of our national equity interests to ensure accountability, transparency, and the maximization of benefits for our people.” Prime Minister Marape explicitly stated that, once the Cabinet receives the complete report, the government will make a policy decision on how the 4.27% equity stake should be allocated and managed going forward. He stressed the government’s firm commitment to ensuring that landowners and provincial governments are properly identified as beneficiaries, while safeguarding long-term national interests. “We will not rush this decision. It must be carefully structured to ensure fairness, sustainability, and direct impact,” he said. The Prime Minister outlined a “three-pronged” approach currently under consideration: 1. Direct benefit distribution: Ensuring tangible, positive financial returns from part of the equity are delivered directly to landowners and provincial governments—without unnecessary intermediaries. 2. Intergenerational savings: Establishing mechanisms to preserve part of the equity’s value for future generations, potentially through trust structures or sovereign-style funds. 3. Transparent governance framework: Implementing robust governance and accountability measures to ensure benefits are managed responsibly and equitably. “Our intention is not merely to distribute wealth, but to build a durable economic foundation for our people,” he said. Prime Minister Marape clarified that although the 4.27% equity stake represents a significant benefit, it is not a statutory right under the Petroleum and Gas Act—unlike the 2% royalty and equity entitlements already being distributed. “This component is a negotiated benefit—a genuine additional allocation made to support landowners and provinces. That is precisely why we must handle it with caution and responsibility,” he said. He noted that existing statutory mechanisms for distributing entitlements are already in place and could be leveraged to ensure efficient and transparent delivery of any future equity benefits. In response to calls for reviewing existing agreements—including the Umbrella Benefits Sharing Agreement and related licence-based arrangements—Prime Minister Marape indicated the government remains open to such reviews where permitted by contractual terms. “We will seek technical advice on the review clauses contained in these agreements. If periodic review provisions exist, we will activate them to ensure the agreements remain fair and relevant to today’s realities,” he said. He acknowledged that certain agreements may have long since passed their scheduled review dates, and assured stakeholders that the government will engage constructively with landowners, provinces, and project partners. On the broader issue of fuel supply and escalating global energy uncertainty, Prime Minister Marape stated that the government is actively pursuing strategies to harness Papua New Guinea’s own oil and gas resources to meet domestic energy demand. He confirmed ongoing discussions with major operators—including Santos Limited and ExxonMobil—to explore onshore processing and utilization of natural gas.

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Santos secured LNG supply agreements with POSCO Steel and Western LNG, sourcing from its global portfolio and the proposed Ksi Lisims project in Canada starting around 2030.

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