Andrew Forrest targets first LNG imports by 2023 at NSW plant
The billionaire has moved a step closer to opening Australia’s first LNG import plant after striking a floating terminal deal with Norway’s Hoegh.
Billionaire Andrew Forrest has moved a step closer to opening Australia’s first LNG import plant in mid-2023 after signing a long-term deal securing a floating terminal for the NSW gas project with Norway’s Hoegh LNG.
Dr Forrest’s Australian Industrial Energy has called for NSW and Victorian gas retailers to sign up for supplies from the Port Kembla project that is seen as critical to ease a forecast supply crunch on the east coast in the next few years as production slumps from ageing fields in Victoria’s Bass Strait.
The plant is now targeting first LNG imports by mid-2023 compared with a previous late 2022 deadline, which could still put Dr Forrest on track as the first LNG importer in Australia despite the nation also being among the world’s largest gas exporters.
Feasibility work on the floating storage and regasification unit will now start with AIE and Hoegh looking to work together designing a vessel that can deliver both natural gas and green hydrogen, backing Dr Forrest‘s ambitious plans to develop a major hydrogen industry in Australia.
The strategy for Port Kembla has changed several times as AIE first sought to lock in customers but struggled to get sufficient sign-up from major buyers other than a preliminary pact with EnergyAustralia.
However, AIE and Tattarang chairman Andrew Hagger said it was now up to customers to commit to the project.
“Now that critical infrastructure agreements and approvals are in place for the Terminal, we look to NSW and Victorian natural gas retailers to now take active steps to help resolve the energy security crisis they have warned about,” Mr Hagger said.
One potential customer, Origin Energy, has been in negotiations to tie up a deal that would see it become the biggest buyer of gas from the project.
However, its decision to sign a four-year deal with Queensland’s Australia Pacific LNG for an additional 91 petajoules of gas from January 2022 along with APA Group’s transport costs down to users in southern states, has sparked questions over the cost competitiveness of Twiggy’s proposed plant.
The iron ore magnate signed a long-term 25-year lease deal at Port Kembla and will build a 435 megawatt LNG and hydrogen power station in the Illawarra initially powered with gas from the import facility but able to operate fully on hydrogen by 2030.
The power station was originally up to 800MW but has nearly halved in size during the planning process this year.
Squadron Energy, owned by Dr 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.
Viva Energy is also in the race to become a gas importer in its own right as it progresses the commercial model for an LNG import terminal in Victoria.
Australia’s east coast gas market has been crimped in the last few years due to Queensland LNG exports, onshore development restrictions, falling Bass Strait production and the increasing cost of bringing new domestic supplies to market.
Squadron chief executive Stuart Johnston quit the company in August after a four-year stint in charge and was replaced by the group’s head of business development, Dr Michael Shaw, on an interim basis.