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The Northern Territory government has signed a nine-year deal with US gas company Tamboran Resources to buy fracked gas from the Beetaloo Basin.
It comes more than a year after the NT government approved a full-scale onshore fracking industry in the Beetaloo Basin, despite warnings from climate scientists, environmental groups and some traditional owners.
Chief Minister Eva Lawler said the gas sales agreement with Tamboran Resources would provide the NT with 40 terajoules of gas per day, starting in 2026.
"This is about securing our energy future in the NT," she said.
Tamboran Resources is yet to reach a final investment decision for the project, which is a crucial stage for any major energy project.
Neither Tamboran Resources nor the NT government would provide details about the cost of the deal.
Ms Lawler said the decision to purchase gas from Tamboran's activities in the Beetaloo Basin, about 500 kilometres south-east of Darwin, followed ongoing supply issues from Italian-owned Eni's Blacktip gas field in the Joseph Bonaparte Gulf, south-west of Darwin.
"We have relied on gas from Blacktip and we know there has been issues around Eni being able to supply the full amount of their contract," she said.
"The Northern Territory government will have a portfolio of gas instead of just relying on Eni, which we did in the past."
According to an ASX announcement, the NT government's gas sales agreement will last for an initial term of nine years, with the option to extend for a further six-and-a-half years until 2042.
Tamboran Resources chief executive Joel Riddle said the company would prioritise the territory's gas needs first, before supplying the east coast gas market and eventually powering its Middle Arm LNG project to ship Beetaloo gas overseas.
Mr Riddle said the plan to supply the NT with 40 terajoules per day would constitute about 60 per cent of all gas consumed in the NT.
"All of this will flow to benefits for the Northern Territory in the form of energy security and in the form of royalties," he said.
"Royalties from onshore [gas] flow ... will come in the form of billions of dollars that will go towards schools, roads, hospitals and supporting greater economic prosperity for all Territorians."
Environmental groups, Indigenous elders criticise gas deal
The NT government's new gas sales deal has already attracted criticism by environmental groups opposed to fracking.
Frack Free NT spokesperson Peter Callender said: "Territorians should be really worried that our government is signing deals with gas companies for projects that haven't even been through the assessment process yet".
Environment Centre NT co-director Kirsty Howey described the deal as "disgraceful and risky".
"The government should be investing in renewables and storage to shore up our energy security, rather than shackling our economy to a new, utterly unreliable gas source, that should have been jettisoned years ago," she said.
Samuel Sandy, Djingili elder and chair of Nurrdalinji Aboriginal Corporation, said "we don't want that fracking on our country".
"Traditional owners are fed up with the big lies told about the job and economic benefits of gas," he said.
Calls for more transparency
Victoria Energy Policy Centre director Bruce Mountain criticised the decision not to divulge any information about the cost of the deal to taxpayers, saying it showed a "lack of transparency" and was "unacceptable".
"The Northern Territory is a government and it's securing this gas for public purposes. This should be open for public scrutiny," he said.
"The terms of it, the arrangements, the winners, the losers, the subsidy ought to be up for public debate."
Professor Mountain also expressed doubt the Beetaloo Basin would be commercially viable without the NT government becoming a customer.
"I think without a juicy offtake contract from the Northern Territory government, it would be getting nowhere," he said.
"It's in the middle of nowhere, it's extraordinarily expensive to ship it, [and] there is substantial offshore gas."
Gas supply issues loom in short-term
The NT government is currently buying gas from Santos' Darwin LNG plant to make up the shortfall from Eni's Blacktip field, but that supply is due to run out in the next few months.
Earlier this month, the NT government signed an agreement to buy a small amount of gas from Central Petroleum's gas field south west of Alice Springs until the end of 2024.
"There's no question the market is in a state of flux and gas prices through the rest of this year are probably going to be volatile, to say the least," Central Petroleum chief executive Leon Devaney said.
Meanwhile, the operator of a pipeline which connects the NT to the east coast gas market is preparing to reverse its flow, opening the potential for the NT to import gas for the first time.
The NT government signed a Memorandum of Understanding in 2023 with another Beetaloo Basin gas company, Empire Energy to potentially buy gas for electricity supply.