Australian companies Santos and Perdaman have signed a non-binding agreement for the supply of 14.5PJ of natural gas per annum over 20 years.

Santos said on Wednesday that the agreement was subject to a final investment decision for the Narrabri Gas Project.

The gas would be supplied to a proposed new ammonium nitrate plant near Narrabri to produce fertilizer for agribusiness, a key sector in the economy of New South Wale, Australia.

The plant would be developed in parallel with the Narrabri gas project to use appraisal and early development gas.

Hybrid power will also be assessed to provide electricity to both the Narrabri gas project and the ammonium nitrate plant.

Santos Managing Director and CEO Kevin Gallagher said, “Santos will bring to Narrabri our experience in Queensland where we have reduced connected well costs by a massive 84 percent since 2015.”

“The Narrabri gas project is currently being assessed by the NSW Department of Planning ahead of a decision by the Independent Planning Commission,” he said.

The proposed Narrabri Gas Project could supply up to 50 percent of NSW gas needs and provide significant benefits to the region and the state more broadly. It is expected to bring up to AUD$1.2 billion in State royalties over its duration.