Strike Energy Ltd (ASX:STX) has executed a new gas sales agreement with Orica International Pte Ltd for the supply of up to 64 petajoules of gas from Strike’s Southern Cooper Basin Gas Project.
Strike holds a 66.67% interest and is the operator of the project along with Energy World Corporation (ASX:EWC) (33.33%).
Last month, Strike entered into a binding term sheet with Orica for the negotiation of a new gas sales agreement to replace the existing one entered into in 2014.
The renegotiation and signing of this new agreement with the foundation customer are clear indications that Strike is progressing toward commercial development of the Southern Cooper Basin Gas Project.
Importantly, the external environment is changing positively, with the forward gas demand continuing to grow with supply tightening.
The total market demand from the East Coast Gas Market is circa 2100 petajoules per annum of which 70% is driven by the LNG producers.
The domestic market is currently 465 petajoules short. This is expected to rise to 600 petajoules by 2021.
Strike’s development of the Southern Cooper Basin Gas Project is expected to provide a critical supply of gas into the East Coast market at a time of significant need.