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GLNG® today announced a binding Heads of Agreement to sell 2 million tonnes per annum (mtpa) of liquefied natural gas to PETRONAS with an option for an additional 1mtpa. The Agreement is conditional only upon the GLNG project reaching a final investment decision.

The Agreement covers the sale and delivery of LNG to PETRONAS for a period of 20 years beginning in 2014. The LNG will be utilised in the Malaysian domestic gas market.

The Agreement provides for the firm sale of 2mtpa. Additionally, PETRONAS has undertaken to buy a further 1mtpa on the same terms should GLNG elect to supply. While the commercial terms and price are confidential, they are in line with recent industry practice for long term contracts.

Santos’ Chief Executive Officer David Knox signed the Heads of Agreement in Kuala Lumpur today with Datuk Wan Zulkiflee Wan Ariffin, PETRONAS’ Vice President of Gas Business.

Mr Knox said the marketing agreement was a very important milestone for the GLNG project.

“We are pleased to announce PETRONAS as the foundation customer for GLNG. Today’s Agreement underpins the volumes for the first train of the GLNG project and we remain on schedule for first shipments of LNG in 2014.”

“GLNG has once again reaffirmed its leadership in CSG to LNG development with the execution of this binding Agreement,” Mr Knox said. “The Agreement further strengthens the Santos – PETRONAS relationship and provides a strong foundation for a final investment decision on GLNG in the first half of 2010.

“The development of the GLNG project will see the creation of thousands of jobs in regional Queensland and bring long-term benefits to the communities in which we are working, from our coal seam gas fields around Roma to the site of the LNG plant in Gladstone.”

“Up to 6,000 jobs would be created in the development of the three train LNG plant outlined in the Environmental Impact Statement recently submitted to the Queensland Government.”

The Environmental Impact Statement is expected to be advertised for public release by the Queensland Coordinator General on Saturday 20 June.

“This is a significant milestone in the environmental assessment process for the project,” Mr Knox said.

About GLNG

GLNG is a multi billion dollar project set to deliver the world’s first major coal seam gas (CSG) to LNG operation. The project involves extracting gas from the Surat and Bowen Basins in Queensland’s south west, and piping it 435km to Gladstone where it will be chilled to minus 161 degrees Celsius and liquefied for transport by ship to overseas markets. PETRONAS, Malaysia’s national oil company and third largest LNG producer in the world, took a 40% interest in GLNG on 29 May 2008. This year GLNG was the first major integrated CSG to LNG project to submit its Environmental Impact Statement. GLNG is a 60/40 joint venture between Santos and PETRONAS.