Venice Energy’s LNG import project edges closer

A proposed LNG import terminal at Adelaide’s Outer Harbor is on course for a final investment decision by the end of the year as it edges closer to locking in customers and funding.

Venice Energy is looking to establish an LNG import facility that has been dubbed a “tolling” infrastructure project. Under the scheme, customers book capacity at the plant and source their own LNG, paying a fee to the terminal owner for processing – negating the difficult task of aligning gas supply agreements with end-user demand.

LNG import facilities in Australia have to date been difficult to establish. Developers are unwilling to sign up to buy gas without certainty that they have domestic customers to purchase the supplies, while retailers have historically been unwilling to enter into firm contracts without assurance of available gas.

Venice Energy hopes its model, as the infrastructure middleman, will unlock the market, and there is confidence that it will progress to a final investment decision by the end of December.

“Venice Regas has made significant progress on the project, which is on track to commence construction before the end of 2024,” the company said in a statement.

Such is the confidence, Venice has begun employing new staff and is expected to ink contracts with suppliers.

An import LNG business will be welcomed by Australian officials, who are struggling to safeguard domestic supplies despite the country being one of the world’s largest LNG exporters. Pressure on Australia’s east coast market is expected to be exacerbated as supplies from traditional sources slow.

ExxonMobil – one of Australia’s largest producers of domestic gas – this year said its Gippsland Basin joint venture, which historically supplies more than 70 per cent of southeast Australia’s domestic gas demand, was rapidly dwindling.

ExxonMobil said the number of producing wells had shrunk from 122 in 2010 to 68, and would drop to 36 by winter 2024.

The structural deficit leaves the east coast facing an uncertain future. New developments have been curtailed in NSW and Victoria, while new pipelines would be needed to unlock potential supplies in Queensland and the Northern Territory, and this could be prohibitively expensive and would require significant local support.

The Australian Energy Market Operator has said urgent investment is needed, but projects have been stalled by community opposition, legal rulings and regulatory uncertainty triggered when the government implemented its mandatory code of conduct – the centrepiece of which included a price cap on uncontracted gas.