Oz East Coast Needs LNG Imports: EnergyQuest

States on the Australian east coast, especially Victoria, will need to import LNG to bridge the expected supply shortfall, energy consultancy EnergyQuest said in a report published on October 15.

“Additional gas supplies are urgently needed for the southern states, particularly Victoria, where gas is predominantly used for manufacturing, for commercial purposes such as restaurants and for home heating, cooking and hot water. LNG imports are the only means of securing supply sooner rather than later and at the necessary volume,” it said, adding imports will also help in reducing gas prices.

AGL’s Crib Point is not the only proposed LNG import project in Victoria, Viva Energy is actively pursuing a project for Geelong.

Victorian gas demand, the largest on the east coast, is supplied from fields offshore Victoria that also meet Tasmanian demand and a substantial proportion of gas for New South Wales (NSW) and South Australia. Victoria’s fields are on the brink of decline, EnergyQuest said.

“Production offshore Victoria starts to decline around 2023. Moreover, Cooper Basin production, which is also important for NSW and South Australia, starts to decline around 2026. Even if Santos’s Narrabri project goes ahead following the recent favourable decision by the NSW Independent Planning Commission, it will not be sufficient to offset the decline from offshore Victoria and the Cooper Basin,” EnergyQuest added.

There has been some criticism about LNG import projects. Critics claim it does not make sense for Australia to import LNG given it is the world’s largest exporter of LNG. EnergyQuest has argued that other major LNG exporting countries also import gas from other countries as offtakes both LNG and pipeline gas as well as using LNG to move gas domestically.

“Large distances between producing fields and demand centres mean transport by sea is more price competitive than building pipelines across large distances, difficult terrains and water. This is the case in Malaysia (the world’s fourth largest LNG producer) and Indonesia (the sixth). The same considerations apply in Australia,” it said.