PORT Kembla has been chosen as the potential site of the first liquefied natural gas import terminal in New South Wales, with Australian Industrial Energy (AIE) announcing that it had signed a memorandum of understanding with NSW Ports.
The MOU provides AIE with exclusive rights enabling it to begin the detailed engineering phase for the Port Kembla Gas Terminal.
NSW Ports CEO Marika Calfas said she was pleased to announce the signing of the exclusive MOU to take the development of NSW’s first ever LNG import terminal forward.
“For Port Kembla this presents an opportunity for diversification and growth in port activities and the potential for new value-add services,” she said.
The facility would be a floating storage and regasification unit (FSRU), moored at Port Kembla’s Berth 101 on the eastern edge of the Inner Harbour.
Construction, which AIE reckons would cost between $200m and $300m, would include excavating a pocket for the FSRU and a new, 300-metre wharf. The FSRU would be permanently moored at the site, with LNG carriers calling every two or three weeks.
Additional works that would be required before commissioning would be loading arms for gas offtake, and a 12.7-kilometre, 16-inch pipeline, which would tie-into the existing Eastern Gas Pipeline, which runs from Longford, Victoria to Western Sydney.
The LNG storage tanks and regasification infrastructure would be self-contained within the FSRU, with gas-metering equipment housed onshore.
AIE is a consortium comprising Andrew “Twiggy” Forrest’s Squadron Energy, energy infrastructure investor Marubeni and Japanese LNG company JERA. AIE has entered into 12 memoranda of understanding for the supply of gas from the terminal, providing the confidence for the company to move ahead with development plans.
AIE chose Port Kembla after a comprehensive evaluation process looking at port operations, berth configuration options, proximity to the existing east coast gas transmission network and support from the local business community.
AIE CEO James Baulderstone, said New South Wales faces significant challenges in ensuring available and affordable gas supplies.
“In recent times wholesale gas prices have doubled, and in many cases tripled in NSW. In addition, many industrial companies are now unable to secure gas for any period longer than 12 months,” he said.
“The world-leading expertise of the AIE partners, now combined with the enthusiasm of NSW Ports and Port Kembla’s regional business community to see this project realised, means AIE is well placed to deliver firm, long term gas on highly competitive pricing and terms as soon as 2020.”
JERA senior vice-president, fuel business development and gas, Gaku Takagi said JERA would be able to bring ample, competitively priced LNG to NSW as the largest buyer of LNG in the world.
“JERA is very excited to be working with our colleagues at Marubeni who have world-wide energy investment and infrastructure expertise and of course Squadron Energy which brings deep knowledge of the Australian gas and energy markets,” Mr Takagi said.
“Together, we believe we can make a major contribution to NSW and east coast energy supply competition and security.”
AIE estimates the Port Kembla Gas Terminal would be able to supply more than 100 petajoules of gas to the New South Wales market. The state currently consumes about 160 petajoules per year, 95% of which is imported from Victoria, Queensland and South Australia, according to the NSW Department of Planning and Environment.
NSW Minister for Trade and Industry Niall Blair said the terminal would be a “game changer” for Port Kembla, the Illawarra and the entire state.
“NSW currently relies on various interstate sources for 95% of its gas needs, which can be less reliable and more expensive,” he said.
“This proposal has the potential to provide long term security of gas supply at competitive prices.”
A statement from NSW Ports pointed out that the development of an LNG importation facility would be an opportunity for diversification and growth in activities at a port.
Ports Australia chief executive Mike Gallacher said the announcement was a brilliant development for the people of New South Wales and the Illawarra region.
“Ports across Australia act as gateways to international and domestic economies giving facilities like the new Port Kembla Gas Terminal (PKGT) access to international gas markets while providing a service to people and business in NSW,” Mr Gallacher said.
“The facility at the Port will bring jobs to the region and provide cheaper natural gas to the state of NSW. This partnership is a great example of how the industry can work with the Port sector to the benefit of people living near the Port and further afield.”
While the LNG import terminal will be the priority, AIE is also looking at developing an associated gas-fired electricity generation plant in conjunction with the LNG terminal.
The exact location and timing of such a project is currently under assessment.
AIE’s Mr Baulderstone said: “AIE looks forward to working with all relevant stakeholders, including the Port Kembla community, regional businesses, the NSW Government and existing infrastructure owners to enable the Port Kembla Gas Terminal to deliver its first supply of gas in early 2020.”