PERTH (miningweekly.com) – Oil and gas major Santos and fellow-listed Origin Energy have signed a new agreement with polyethylene producer Qenos to supply ethane gas.
Under the terms of the agreement, the two companies will supply an estimated 27 PJ to Qenos for the remainder of 2017 until the end of 2019.
The ethane is processed at Santos’s Moomba gas plant and piped to Qenos’s operations at Botany Bay for use as a feedback in the manufacture of polyethylene.
Santos MD and CEO Kevin Gallagher said on Friday that he was pleased Santos could continue to provide ethane to the New South Wales manufacturer.
“The Cooper basin has been supplying ethane to Qenos for over 20 years, and I am delighted we have been able to agree new supply arrangements with the company and reinforce our support for Australia’s manufacturing industry.
“The agreement also highlights the point that gas is not only a clean, reliable energy source, it is a critical constituent in a range of manufactured products.”
Meanwhile, Santos on Friday also announced that it had priced a $800-million senior unsecured fixed rate bond transaction in the Regulation S market. The bonds will be issued off the company’s Euro medium term note programme, dated August 30, and will be guaranteed by Santos.
The bonds have been priced at a fixed coupon of 4.125% for a period of ten years, maturing in September 2027.
Gallagher noted that the offering was consistent with the company’s strategy of securing very competitively priced long-term capital.
“This is an excellent result for Santos, showing strong support from the capital markets. The bonds will replace the existing Euro hybrid notes with more efficient long-term debt funding, leading to significant annual interest cost savings and a further reduction in the company’s forecast free cash flow breakeven oil price.”
Gallagher added that Santos’s focus remained on debt reduction, with the company on track to achieve its target of $2-billion net debt by the end of 2019.