Jera Backs Rival Australia LNG Import Project

Australia’s tight east coast gas market may go from having zero to having two LNG import terminals in a couple of years’ time following the emergence of a plan by a new consortium, Australia Industrial Energy, to build a receiving plant in the region.

The consortium of energy and resource players – which includes the world's largest LNG buyer Japan's Jera, Japanese trading house Marubeni, and Australia's Squadron Energy – are planning to build an LNG import terminal in New South Wales.

It is understood that the plan is for a terminal which can bring in around 2mn metric tons/yr of LNG (equivalent to 2.7bn m³/yr) to be built by 2020 in one of three New South Wales (NSW) ports: Newcastle, Port Botany and Port Kembla.

The project is intended to supply industrial customers and is also understood to be getting technical support from US giant GE for the development of a gas-fired power station.

“We have yet to complete the final feasibility studies, investment decision and regulatory approvals but it is already clear that this virtual pipeline provides the capability of accessing the world’s most affordable gas and bringing it to the east coast market,” said project leader James Baulderstone, formerly Santos vice president for eastern Australia.

“We look forward to working with all relevant stakeholders, including the NSW government and existing infrastructure owners, to enable the project to be in a position to make a final investment decision during 2018,” he said.

"Marubeni and Jera think that this project fits well with and will enhance the robust relationship between Australia and Japan, and will contribute to the availability of stable supplies of LNG not only in Australia and Japan, but also in the Asia Pacific region," said Jera in a statement February 26. Jera is a 50-50% joint venture of two leading Japanese utilities and generators Tokyo Electric (Tepco) and Chubu Electric.

Squadron is a subsidiary of Minderoo Group, controlled by Andrew and Nicola Forrest, which has a 33% stake in Fortescue Metals, plus farmland and food interests, property investments, and other energy and mineral projects.

Major Australian energy retail AGL also has a plan to build an east coast LNG import terminal, on which it is expected to make a final investment decision between July 2018 and June 2019. The AGL plan is for a 100 petajoule (2.7bn m³) year project with construction intended to commence in 2019 and for the terminal to come into operation by 2020/2021. It’s planned to be built at Crib Point in the Australian state of Victoria.

Both the Australia Industrial Energy and rival AGL import facilities would be based on floating regasification and storage units (FSRUs) – or floating import terminals. The moves to build the Australian import terminals come as the country is expected next year to become the world's largest LNG exporter.