AUSTRALIAN Industrial Energy can now finalise supply contracts with industrial customers of its new liquefied natural gas terminal after the project received development consent from the New South Wales’ government.

The first LNG could be delivered to industry by late 2020 from the Port Kembla Gas Terminal, which proponents hope will avert a forecast gas supply shortage.

Around 33,000 businesses and 300,000 jobs are said to rely on a supply of reasonably priced LNG, as well as more than one million homes.


The $250m PKGT project, which the NSW government designated as Critical State Significant Infrastructure last year, could supply more than 70% of NSW gas needs.

AIE is to build a new berth at Port Kembla to accommodate LNG carriers, a floating LNG handling facility, wharf infrastructure and a pipeline to connect to the existing NSW east coast gas network nearby.

The project has already entered into an agreement with Hoegh LNG to supply the floating storage and regasification unit, a critical component of the PKGT.

AIE will use specialised ships as a “virtual pipeline” to transport LNG from a range of sources including domestic Western Australian and global suppliers. Shipping gas this way significantly reduces the transport component of final prices to gas consumers, enabling AIE to deliver a competitive product.

The AIE joint venture partners – Andrew Forrest’s Squadron Energy, Marubeni Corporation and the world’s largest buyer of LNG, JERA Co. Inc – believe this “built-in supply cost advantage”, along with the global purchasing power of JERA, will help PKGT change the east coast energy landscape.

“Our Port Kembla Gas Terminal presents a real opportunity for NSW to take control of its gas supply challenges by introducing significant new and competitively priced supply directly into the heart of the Illawarra industrial region,” the AIE partners said.

Squadron Energy chief executive Stuart Johnson said they were “extremely pleased” to obtain development consent.

“It paves the way for us to now focus on closing commercial negotiations with customers which in turn will enable the project to take a positive final investment decision around the middle of the year,” Mr Johnston said.

One of the development conditions is that the project manages impacts during the construction of the import terminal, including excavation and dredging activities in Port Kembla harbour and management of contaminated materials and acid sulphate soils.