Woodside planning to supply east coast markets with LNG
Woodside Petroleum has hatched a plan to supply the east coast markets with LNG from Western Australia for the first time.
Woodside Petroleum has hatched a plan to supply the east coast markets with LNG from Western Australia for the first time.
The memorandum of understanding would result in Woodside shipping LNG from WA to Viva Energy’s planned import terminal in Victoria’s Geelong.
Viva said the scheme with Woodside would allow LNG terminals to operate as virtual pipelines, with vessels able to move gas around Australia rather than building new pipeline infrastructure.
Woodside chief executive Meg O’Neill described the tie-up as a milestone for the Australian gas industry.
The deal “presents an opportunity for Woodside to supply reliable, cost-competitive LNG from our Western Australian projects and global portfolio into the east coast gas market, which is predicted to face a shortfall in coming years,” Ms O’Neill said.
“Working to secure regasification capacity at Viva Energy’s proposed import terminal aligns with Woodside’s future production profile and the ongoing needs of east coast Australian customers for reliable, lower-carbon energy sources.”
Woodside on Wednesday outlined a plan to spend $US5bn ($7bn) on hydrogen and carbon capture this decade as it seeks to pivot into clean energy, but has conceded the move will deliver lower returns with a longer payback period compared with its mainstay oil and gas business
Viva is planning to take a final investment decision on the Geelong project by the third quarter of next year, putting it on track to help ease a gas supply shortfall forecast to hit east coast markets from the mid-2020s.
“Woodside’s potential participation in the Gas Terminal Project highlights the value of LNG terminals as ‘virtual pipelines’ to deliver LNG from Australia and other sources into the east coast domestic gas market,” Viva chief executive Scott Wyatt said.
Viva said in August that AGL Energy’s decision to abandon plans for a rival terminal at Crib Point on Victoria’s Mornington Peninsula in May had boosted the case for its own plans, as had a recent assessment by the Australian Competition & Consumer Commission that the east coast gas market faced a supply shortfall within a year.
The ACCC said then that a shortfall in the east coast gas market was looking “increasingly likely”, flagging a substantial six petajoule shortage in the southern states next year, after Victoria spot gas prices hit five-year highs in July.
While Australia is the biggest LNG exporter in the world, a raft of developers have hatched plans to import the fuel as traditional sources of supply decline from areas such as Victoria’s Bass Strait.
Billionaire Andrew Forrest hopes to open Australia’s first LNG import plant at NSW’s Port Kembla in mid-2023.
Woodside is midway through a $40bn merger with BHP Petroleum that will hand it control of BHP’s east coast gas interests, which include a half stake in the ExxonMobil-operated Bass Strait fields.
