Santos and Origin Energy are understood to have inked a new deal to supply ethane from the Cooper Basin to plastics maker Qenos involving a significant increase in price for the fuel.
The deal to supply Qenos' Botany Bay plant replaces an existing deal which was meant to run until 2019.
Santos is understood to have demanded a hike in the price of ethane, leaving Chinese-controlled Qenos little option but to negotiate or else argue the matter in court.
The deal comes as Santos is desperately trying to fend off government-imposed caps on its LNG exports from its $US18.5 billion GLNG project in Gladstone.
The price hike is understood to kick in around mid September and will last until the contract expires at the end of 2019.
As the only large user of ethane in Australia, Qenos is reliant on supply from the Cooper Basin, using a dedicated pipeline that runs from the basin to the site south of Sydney.
News of the settlement comes after about 12 months of fierce negotiations between the two sides. It coincides with Santos' announcement earlier Thursday that the GLNG venture will divert 30 Peta joules of gas from export to the domestic market.
