Dec 7 (Reuters) - Australia's no. 2 independent gas producer Santos Ltd STO.AX said on Monday it signed a 10-year agreement to supply liquefied natural gas (LNG) from its Barossa project to a unit of Japan's Mitsubishi Corp 8058.T .
Santos will supply Diamond Gas International 1.5 million tonnes of LNG from the Northern Territory project for an initial ten years with options for further LNG transactions.
The agreement is a significant step in reaching a final investment decision for the gas project, which is expected by the first half of 2021, Santos added.
The supply deal represents the company's first long-term LNG sale from one of its major LNG projects, Chief Executive Kevin Gallagher said.
"The SPA delivers a firm LNG offtake arrangement which represents over 80% of Santos' equity LNG volume from the Barossa project at our expected 50% interest level," he added.
The Adelaide-based firm in March deferred an investment decision on the project after oil prices plunged amid coronavirus-driven lockdowns. two companies also inked an agreement to jointly consider opportunities for carbon neutral LNG from Barossa.