Energy Australia sees ‘stars aligning’ for Santos Narrabri gas
EnergyAustralia says the “stars are aligning” on Santos’s $3.6bn Narrabri gas project where it holds a 20 per cent stake.
EnergyAustralia says the “stars are aligning” on Santos’s $3.6bn Narrabri gas project where it holds a 20 per cent stake while the power giant also remains hopeful LNG import plants will proceed on the east coast as it looks to diversify gas supply options.
The energy operator — one of the country’s “big three” electricity retailers — said while Santos had faced a challenging period to gain approvals for Narrabri, the project was now looking more robust.
“It’s looking like the stars are aligning on that project,” EnergyAustralia executive for markets Ross Edwards told a UBS briefing. “Approvals have always been challenging and we are keen to see that come to fruition and it is one of the key supply sources in NSW and Victoria moving forward. We’re looking forward to its success.”
EnergyAustralia in late July backed the gas producer’s efforts to open up a new supply source for NSW but would not confirm if it would retain its holding over the long term.
The Independent Planning Commission is undertaking a final assessment of the development including a major public hearing after the facility received sign-off from the NSW government in June.
EnergyAustralia’s stake dates back to 2012 but Macquarie has argued Santos may realign the partnership if it wins planning approvals given the exploration and production focus may be misaligned with the power retailer’s strategy.
EnergyAustralia has already struck a five-year, $500m supply deal with a rival development, the Andrew Forrest-funded Port Kembla LNG terminal, which will compete with Narrabri for gas customers.
It remains a backer of the import plant and is hopeful other gas users will sign up as customers for the project.
“We’ve been an advocate for that project but we don’t completely control its destiny,” Mr Edwards said. “We’re one of the customers they’re talking about. We’re hopeful they’ll attract a few other customers to bring that project through. There are a number of other projects out there. I’d be very surprised if one of these doesn’t happen.”
Viva Energy is looking to import LNG at Geelong as part of efforts to transform the site into a major energy hub and EnergyAustralia said it would consider the plant among its options.
EnergyAustralia would “certainly talk to them and consider it,” Mr Edwards said.
LNG import plants remain attractive to the power utility.
“We see import terminals as a way of accessing gas when we need it without having to commit to long-term take or pay,” Mr Edwards said.
“We have a strong international linkage in our market out of Queensland and this represents a good option for the southern states.”
With supplies drying up from offshore gas fields in the state’s Gippsland Basin, Viva has pitched its plant as a “virtual pipeline” able to deliver between 80-140 petajoules of gas or 30 per cent of southern state demand from northern fields.
Australia is looking to import LNG for the first time with tight supplies on the east coast forecast over the next few years with much of Queensland’s gas diverted for LNG exports and contract prices failing to budge from a $8-10 a gigajoule window.
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