Andrew Forrest’s LNG import plant on hold till 2022
The $250m LNG import plant backed by iron ore billionaire Andrew Forrest for NSW has been delayed until 2022.
The $250m LNG import plant backed by iron ore billionaire Andrew Forrest for NSW has been delayed until 2022, with a decision to double the facility’s original LNG volumes taking six months to receive planning approval from the state government.
Project developer Australian Industrial Energy originally targeted first gas by late 2020 but are now aiming to make a final investment decision in the December quarter, indicating start-up in 2022 based on a 14-16 month period for construction.
The NSW government on Monday approved AIE’s planning consent for the bigger gas terminal at Port Kembla, which also allows it to take on more LNG deliveries than originally planned.
AIE is a consortium of Mr Forrest’s privately owned Squadron Energy, Japanese trader Marubeni and JERA, an LNG-buying joint venture between Tokyo Electric Power Co and Chubu Electric.
Despite having to put back the schedule, the gas developer said the plant would still be in operation before shortfalls were due to emerge on the east coast and also, critically, in time to meet large customers’ needs in 2023.
“We are allowing ourselves as a project to be ready to respond to first gas in 2022 if there’s a need for it, but I think realistically I’m not seeing any customer putting his hand up saying ‘can I have capacity online by then?’,” AIE’s Port Kembla project head Peter Mitchley told The Australian.
“If you were to look at the big utilities, they talk about requiring gas in 2023.”
EnergyAustralia has committed to securing supplies from the project in a five-year deal for up to 15 petajoules of gas, with the plant aiming to supply 100PJ of gas annually — equivalent to 75 per cent of the state’s demand.
LNG may be supplied from West Australian producer Woodside Petroleum and even the US, to help arrest falling domestic production from Australia’s southern states including the Bass Strait.
Fifteen industrial users signed an initial memorandum of understanding to buy gas from the LNG plant, which then moved into a similar number of gas supply agreements.
AIE’s next challenge is to strike binding five-year deals with its prospective east coast customers, with EnergyAustralia the only named buyer so far. Customers originally lined up included industrial players in NSW and Victoria, corporates and also customers with retail positions, with some buyers already stating a preference for greater supplies during the winter months which AIE expects to be able to accommodate.
The NSW government has already handed critical status to both the Port Kembla plant and a second rival facility at Newcastle’s Kooragang Island, as the state scrambles to ensure it has access to sufficient supplies ahead of the Liddell coal plant exit in early 2023.
The plans have been hatched as domestic gas prices have surged on a wide range of factors, including Queensland’s LNG export plants, the growing cost of developing new gas fields and historic onshore production restrictions in NSW, Victoria, South Australia and the Northern Territory.
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