Andrew Forrest firm on $250m LNG import terminal for NSW
Andrew Forrest has confirmed plans for a $250m NSW gas import terminal, putting it on track to become Australia’s first facility importing LNG.
Billionaire Andrew Forrest, fresh from outlining ambitions to become the world’s biggest renewable investor, has confirmed plans to press ahead with his $250m NSW gas import terminal, putting it on track to become Australia’s first facility importing LNG.
The iron ore magnate has signed a long-term 25-year lease deal at Port Kembla, as foreshadowed by The Australian, and will build an 800 megawatt LNG and hydrogen power station in the Illawarra initially powered with gas from the import facility. Squadron Energy, owned by Mr Forrest’s Tattarang, bought out the two Japanese owners of the plant in October and is now accelerating the project. While Squadron does not yet have contracts in place to cover all of the supply and underpin the investment, several new deals with buyers are expected to be announced before Christmas.
“We have long recognised Port Kembla as the best site for this critical gas project and with the lease for the terminal now agreed, commercial arrangements around future supply contracts can be accelerated with confidence,” Squadron chief executive Stuart Johnston said.
Construction will now start before the end of 2020 and first supplies to be delivered by late 2022, putting Mr Forrest on track as the first LNG importer in Australia only a few years after the nation toppled Qatar to become the world’s biggest gas exporter.
The 800MW power station is shortlisted on the Morrison government’s Underwriting New Generation Investments scheme.
It will be designed as a dispatchable power plant also able to switch to hydrogen fuel as suppliers including Mr Forrest’s Fortescue Metals Group boost production.
“The real headline here is about transition because you can do things now if you talk to the equipment manufacturers around blending green hydrogen into a gas stream today and in several years you would be able to convert to 100 per cent hydrogen,” Mr Johnston told The Australian.
“It might run off gas to start with but as the sources and investment in hydrogen become more competitive, you can blend it without having to retro-fit.”
Mr Forrest told Fortescue shareholders on Wednesday the company plans to bet big on green hydrogen and ammonia in the future, flagging their rise as substitutes for diesel as well as in grid-scale energy generation.
He wants to put Fortescue at the forefront of the coming “stampede” into renewable and green hydrogen and ammonia production as part of a grander plan to turn Fortescue into one of the biggest energy companies in the world.
Separately, wholesale gas and electricity prices remained at low levels in the third quarter of 2020, an Australian Energy Regulator report says.
Gas prices edged up from the June quarter but were still trading at levels of $4-$5.50 a gigajoule last seen in early 2016 while power prices ranged from $34 per MWh in Queensland to $54 per MWh in Victoria and were between 44 per cent and 48 per cent cheaper than a year ago.
The AER noted coal plants continued offering generation at low prices, driven by falling fuel prices and heightened competition from lower priced gas-fired generation and renewables than a year ago.
“Cheaper energy brings benefits across the Australian economy, which is why the government will continue to take strong action to bring down the cost of energy for all Australians,” Energy Minister Angus Taylor said.
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