Gas caps threaten LNG import plants: Woodside

LNG import plants could bridge a forecast gas supply gap on the east coast but government intervention may thwart a string of projects, says Woodside boss.

Woodside Energy managing director Meg O’Neill and APPEA chair Meg O'Neill at the conference on Tuesday. Picture: Naomi Jellicoe

LNG import terminals could bring gas into Australia’s east coast market rapidly, but the federal government’s market interventions – including a $12 per gigajoule price cap – make the economics of such projects difficult, Woodside Energy managing director Meg O’Neill says.

Ms O’Neill, who is also chair of the Australian Petroleum Production and Exploration Association (APPEA) and was speaking at the organisation’s annual conference in Adelaide on Tuesday, said Woodside was interested in progressing its floating LNG project in collaboration with Viva Energy, but the “policy settings” needed to be right.

“The challenging reality is that the Bass Strait assets which we have a 50 per cent stake in are mature assets, they’re in decline, they’re going to provide, year on year, less gas into the market. And how is that gas going to be replaced?’’ Ms O’Neill said.

“We continue to look at options like floating LNG regasification facilities, as a way to be able to surge gas when demand is high.

“And we look forward to working with government to get constructive settings to enable us to do that.’’

Ms O’Neill would not be drawn on whether this meant direct government support for any such project, but said capping the price of gas did not help with the economics of infrastructure that was only needed for part of the year when demand was high.

Viva, which Woodside has signed a memorandum of understanding with, said earlier this year that its potential customers would consider the impact of the $12 price cap when deciding to import gas into Australia. Viva intends to be the operator of an LNG import terminal at Geelong, and would make money as the owner of the infrastructure, but needs to have customers signed on to make its own investment viable.

The terminal, which is awaiting environmental approval from the Victorian government, would, according to the last estimate from the ACCC, be able to bring gas into Victoria by mid-2025 if construction started soon, in advance of a forecast shortfall in east coast gas in 2027.

Ms O’Neill said Germany had been able to turn around an LNG import terminal in about six months when the European gas crisis triggered by Russia’s invasion of Ukraine began.

“Floating LNG or LNG import facilities are a pretty efficient way to be able to bring that gas to market,’’ she said.

“Germany was able to get a floating regas(ification) facility up and running in plus or minus six months quite effectively once they had the government will to do so.

“So I think that is a great opportunity. But all of the proposed projects are stalled.’’

Ms O’Neill said the terminals were only used for part of the year, meaning investors needed to be able to recoup their money over a “relatively short period of time’’.

“With the gas prices caps then it’s going to be more difficult to recoup the costs,’’ she said.

“So these are some of the challenges … around being able to move those projects forward.’’

Ms O’Neill said previously stalled talks with customers had resumed, bur Woodside was still keen for more clarity on gas market interventions expected to be in place until mid-2025. “Whilst … we’re still in a consultation process we do have sufficient certainty that we are progressing some agreements,’’ Ms O’Neill said.

Originally published as Gas caps threaten LNG import plants: Woodside