Andrew Forrest loses Squadron Energy boss Stuart Johnston
Billionaire Andrew Forrest’s plans for a LNG import plant have taken a back step after Squadron Energy CEO Stuart Johnston quit
Billionaire Andrew Forrest has suffered a blow after the head of his Squadron Energy unit resigned, creating a fresh hurdle as it works to develop Australia’s first LNG import plant in NSW’s Port Kembla.
Squadron chief executive Stuart Johnston quit the company last week after a four-year stint in charge, with oversight of an ambitious LNG import plan that is seen as critical to ease a forecast supply crunch on the east coast in the next few years.
The strategy for Port Kembla has changed several times as Squadron first sought to lock in customers but struggled to get sufficient sign-up from major buyers other than a preliminary pact with EnergyAustralia.
Mr Johnston has been replaced by Squadron business development head Dr Michael Shaw on an interim basis, with the process to select a permanent successor well advanced.
“After more than four years in the role, Stuart Johnston has stepped down from his position as CEO of Squadron Energy. Tattarang thanks Mr Johnston for playing a pivotal role in the expansion of Squadron Energy’s transformational energy portfolio and developing projects from the ground up,” Squadron said in a statement.
The iron ore magnate signed a long-term 25-year lease deal at Port Kembla 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 has been accelerating the project. However, the lack of contracts to cover all of the supply from the AIE project and underpin the investment remained an issue, according to Credit Suisse.
The LNG terminal “has committed so much on spec already that it would be hard to turn back now”, Credit Suisse analyst Saul Kavonic said. “But clearly the commercial side has not progressed as hoped, with offtakers remaining elusive for time being, and some of them opting to secure gas more cheaply via pipeline from Queensland.
“The fact that the most informed and active gas market participants have not opted to sign up for supply from AIE does not provide comfort the import terminal’s economics will stack up. Indeed AIE may find itself in a disadvantaged negotiating position, as potential offtakers could push for haircuts on any toll whilst competing projects such as Viva Energy may emerge as more competitive.”
Viva is leaving the door open to becoming a gas importer in its own right as it considers the commercial model for an LNG import terminal in Victoria.
Port Kembla hopes first supplies will 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.
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