Posted September 07, 2017 15:43:36

Photo: Santos will supply more east coast customers instead of exporting LNG. (ABC News)

Energy company Santos has agreed to supply gas to 330,000 Australian east coast homes over the next two years rather than export it.

Santos and its GLNG partners announced they would sell 30 petajoules (PJ) of gas to east coast customers including electricity companies next year and in 2019.

Santos managing director Kevin Gallagher said that the gas would otherwise have been exported as LNG.

"Over the last few months Santos has been working constructively with the Federal Government and our GLNG partners to supply additional gas to the east coast domestic market," he said.

"Thirty PJ is a material volume of gas which would power a 228-megawatt power station or 330,000 homes over the two-year period."

The announcement follows a Federal Government decision earlier in the year to restrict gas exports, in a bid to counter domestic shortages which have been pushing prices higher in Australia, and in turn affecting power generation.

Prime Minister Malcolm Turnbull did not specify how much impact export controls were likely to have on prices, but said wholesale prices fell after the federal decision was taken.

Mr Turnbull argued it would be unacceptable for Australia to become the largest global exporter of LNG but have a shortage of east coast domestic market gas.

Mr Gallagher said the decision taken by Santos was further proof of its readiness to respond to market dynamics and meet local gas demand.

"We are committed to improving energy reliability and affordability for all Australians, both householders and industry," he said.

Santos earlier decided to deliver up to 72 PJ of gas over four years into the south-east market through a swap agreement and sale of 15 PJ to the Pelican Point power station in Adelaide.

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