A major long-term gas agreement has been locked in between the South Australian Government and Santos, securing a supply deal that’s set to play a pivotal role in transforming the Whyalla Steelworks and keeping more of the state’s gas on Australian shores.
Officially signed on Monday, June 29th, the agreement establishes the South Australian Strategic Gas Reserve, guaranteeing 20 petajoules (PJ) of gas each year for a decade from 2030.
To put that into perspective, the annual supply is equivalent to around one-third of South Australia’s total yearly gas consumption across homes, businesses and industry, and exceeds the average annual gas use of all residential and commercial customers combined.
Rather than being exported overseas, the gas will remain in South Australia, where it will primarily support the future redevelopment of the Whyalla Steelworks under its next owner.
The agreement is expected to be key in the transition from traditional steelmaking to gas-powered Direct Reduced Iron (DRI) production, dramatically reducing emissions while securing the long-term future of one of the state’s most significant industrial sites.
Currently, the Whyalla Steelworks consumes around 6PJ of gas annually. Under a gas-powered DRI model, that demand would almost triple to 17PJ each year.
The environmental benefits are also substantial. Carbon emissions from the steelworks are expected to fall from approximately 2.45 million tonnes annually to around 1.25 million tonnes, a reduction of almost 50 per cent.
“It’s a significant moment to be formalising this historic agreement with Santos that will underpin the industrial transformation of our state,” shared Premier Peter Malinauskas. “Access to reliable and competitively-priced gas is vital to the transformation of steelmaking in Whyalla, as well as being pivotal for potential buyers of the steelworks.”
The new reserve will also significantly boost South Australia’s gas security, increasing the state’s annual supply from around 61PJ to more than 80PJ.
Energy and Mining Minister Tom Koutsantonis said, “This deal is the equivalent of taking 288,000 cars off the road. Currently, Cooper Basin gas underpins exports via Gladstone to overseas customers, so the deal will see much-needed domestic gas from the Cooper Basin retained for domestic industrial use and job creation.
“This will help lock in the future of the Cooper Basin that will see hundreds of millions of dollars invested in exploration and production in South Australia over the next 15 years.”
The Government will prepay for part of the gas supply, enabling Santos to continue investing in its Cooper Basin operations. Once a new owner is confirmed for the Whyalla Steelworks, commercial arrangements will allow the operator to purchase the gas required to run the transformed facility, with the Government recovering its costs through those agreements.
Santos Managing Director and CEO Kevin Gallagher shared, “Santos is an important corporate citizen of Adelaide and South Australia, employing around 700 people in Adelaide and another 400 in Port Bonython, Whyalla and Moomba. This agreement helps secure jobs in Adelaide and regional South Australia for at least the next 15 years.”
“It is good news for all the South Australian businesses and community partners we work with. Last year alone, Santos spent more than A$370 million with local businesses, invested A$6 million in South Australian sport and community initiatives, and paid about A$60 million in state royalties and taxes.”
South Australia continues to position itself as a leader in low-carbon manufacturing, with the future of the Whyalla Steelworks central to the state’s plans for greener steel production and long-term industrial growth.
