Investment ‘to walk out door’ over gas delays
NSW gas users have threatened to pull $2 billion in planned investment over delays.
Businesses have threatened to pull $2 billion of planned investment from NSW as frustrations mount that delays approving Santos’s Narrabri project will cripple the viability of their operations.
Gas giant Santos issued a plea yesterday for the NSW government to outline its approval timeline for its $3bn coal-seam gas project in the Gunnedah Basin just days after the Queensland government agreed on a deadline to make a call on Adani’s long-delayed Carmichael coalmine.
Santos’s demand has been reinforced by industrial gas customers, who have agreed to preliminary deals to buy gas from Narrabri, which could meet half the gas needs of the state.
Indian-Australian industrial company Perdaman Group, Australia’s largest brickmaker Brickworks and gas wholesaler Weston Energy are calling on the Berejiklian government to make a final decision on Santos’s project this year. Perdaman is considering developing a $US1bn ($1.44bn) ammonium nitrate plant near the town, 520km northwest of Sydney, which could supply fertiliser for agribusiness or explosives for the state’s mining industry.
But the manufacturer, which has signed a preliminary 20-year supply deal, says it is concerned about whether Narrabri can produce first gas by a 2022 target, given the approval lag. Santos submitted its environmental impact statement in February 2017 to the NSW Department of Planning and Environment, which is reviewing the project before it proceeds to the state’s Independent Planning Commission.
“If there is a substantial delay, then these things can be deal-breakers,” Perdaman managing director Vikas Rambal told The Australian. “We have agreed to a deal with Santos based on some milestones and the state government needs to understand they are a critical part of that timeline.”
Mr Rambal said Perdaman could redirect the investment to other international destinations including New Zealand, Indonesia or the Middle East, and drew a comparison with a $4bn urea project on the Burrup Peninsula in the Pilbara where it is working with Woodside Petroleum and the state government.
He said the West Australian government was “very project focused. They have a timeline to meet and you have certainty.”
For Brickworks, a pending $250 million investment refitting its NSW kiln operations may be canned, with that investment redirected to other Australian states where it can source gas supplies.
“Unless the board knows there’s going to be supplied gas at a certain point in the future, we can’t bring ourselves to make those investments,” said Brickworks chief executive Lindsay Partridge. “We’ve got $250m slated for investment in NSW but it won’t happen unless we get a guaranteed supply of gas. We don’t need to invest in NSW.”
Manufacturers along the east coast are struggling to compete with high energy input prices. Gas shortages there are set to emerge within three years and prices will remain high for a decade, putting pressure on large industrial users struggling with soaring tariffs.
“It could mean we import the bricks and that means the jobs will go too,” Mr Partridge added.
Opponents of the development are concerned about its potential impact on groundwater and surrounding agriculture, with the CSG project getting a record 23,000 submissions on its environmental impact statement.
Weston chief executive Garbis Simonian said a thorough environmental process needed to be balanced by realistic project timelines. With 95 per cent of NSW gas imported from other states, he said it was critical to get the Narrabri project moving. NSW Planning Minister Rob Stokes said it was “vital to follow a considered and independent process not influenced by private commercial interests or timelines”.
More Coverage
