The extended contract means that Cooper Basin ethane supply to Qenos will continue to the beginning of 2010, with potential for a further extension, with Qenos agreeing to purchase up to 65 petajoules (PJ) of ethane over the extended period.

Qenos will pay a price determined by the West Texas Intermediate crude oil price. Depending on the oil price and the actual level of ethane supplied by the Producers, the contract extension could generate additional revenue of between $208 million and $280 million in today's dollars.

"The contract extension is an excellent outcome for the Cooper Basin as it secures another long-term sales commitment for the Producers," said John Ellice-Flint, Santos' managing director.

"Qenos is an important and valued customer and we are pleased to conclude this mutually beneficial deal which has the potential to be extended even further in the longer term."

The Producers signed the original contract with Qenos in 1994 agreeing to supply approximately 156 PJ of ethane. To meet this contract the Producers constructed a new ethane processing plant at Moomba. Ethane is transported via a dedicated ethane pipeline from Moomba to the Qenos plant at Botany, New South Wales.

Last week the Producers announced the addition of BHP Billiton to the customer list with the signing of a long term contract for the supply of gas to its Cannington Mine in northwest Queensland.

BHP Billiton agreed to purchase up to a total of 14 petajoules (PJ) from the Producers over 8 years with first supplies beginning December 2003 ramping up to full supply in late 2005.

Interests in the Producers are Delhi (ExxonMobil) 23.2% Origin Energy 16.7% and Santos (operator) 60.1%.