AGL to press ahead with plans for gas import terminal

The energy producer has chosen Crib Point at Victoria’s Western Port as the site of a $250m import terminal.

AGL chairman Graeme Hunt at the company’s annual meeting in Melbourne.

AGL Energy’s new chairman, Graeme Hunt, said Malcolm Turnbull’s moves to restrict Queensland LNG exports was unlikely to affect AGL’s plans to construct a Victorian gas import terminal next financial year.

AGL has chosen Crib Point at Victoria’s Western Port as the site of a $250m import terminal it is doing a feasibility study on. The plan drew scepticism because of the apparent absurdity of Australia, soon to be the world’s biggest LNG exporter, having such an inefficient market that it needs to buy gas from overseas.

But AGL said the lack of competition in southern gas markets made it realistic.

Mr Hunt, who took over as chairman from Jerry Maycock after yesterday’s annual meeting, said government pressure on Gladstone’s three LNG plants to put more gas back into domestic markets was unlikely to make an import terminal unappealing.

“Our view of the market is that it will, at this stage of analysis, support investment,” Mr Hunt said. “If the supply and demand balance changes, we’d look at that investment, but we think there is probably room enough for imports alongside whatever might happen with supply of domestic gas.”

Analysts have questioned whether the import terminal itself would be profitable. But the extent of AGL’s exposure to gas prices may mean it does not need to be profitable to be a sensible investment if it helps bring down gas prices.

“We see everything lining up to say adding more competition to the east coast gas market is of value to our customers,” AGL chief executive Andy Vesey said yesterday. “This is about opening up a valve to let us get to competitive global prices.”