Viva expects FID at Geelong LNG in late 2022
Australia’s Viva Energy is expected to announce the final investment decision (FID) on its Geelong LNG import terminal in Victoria in the third quarter of 2022, a company spokesperson told NGW.
“The Viva Energy gas terminal project is progressing well. We are currently completing studies for the environment effects statement which will be on public exhibition early 2022 with anticipated FID in Q3 2022,” the spokesperson said. “We are still on track for construction in 2023 and first gas in Q2 2024.”
Commercial negotiations are progressing well with the company’s two partners that are comprised of two consortia of Engie-Mitsui and Vitol-VTTI. “It is likely we will pursue a tolling business model where we provide regasification services. We are also analysing the potential for Viva to import gas in addition to tolling,” the spokesperson said.
Viva signed memoranda of understanding (MoUs) with the two consortia in December last year. The company signed the MoUs with a partnership between Engie Australia & New Zealand and Mitsui & Co. and a joint venture between Vitol and VTTI. The partners will potentially work with Viva in designing and developing the terminal.
On signing of the FSRU charter deal, the spokesperson said that this is an important part of the project and progressing well. “We hope to have more to say on this in the near future,” the spokesperson added.
The terminal will serve as part of the broader Geelong energy hub in Corio, which also comprises an oil refinery operated by Viva. The company first announced plans to establish an LNG import terminal in June last year. According to Viva, the project will make use of existing port and energy infrastructure, including access to Victoria's gas transmission network, making it significantly more competitive than rival proposals.
For Viva, the project partners are potential buyers of capacity rights in the terminal which would underpin the project FID.
The company believes that the Australian gas pricing will progressively move towards regional benchmarks and this will become more pronounced as the southeast Australian market becomes increasingly short of gas from local domestic sources from the mid-2020's onward.
“As such we expect the terminal to reach a high level of throughput,” the spokesperson said.
Market to drive the need for projects
Apart from Viva, Australian utility AGL had also proposed an import terminal in Victoria but the project was blocked by the state government in March this year on environmental grounds. Subsequently, AGL scrapped the project in May.
Viva believes ultimately it is the market that will drive the need for the projects. “We believe our project is well positioned as our terminal is located in Victoria and this is where the gas will be needed. In addition, we are close to the gas transmission system requiring on a short pipeline to be built, which means less infrastructure and in turn, lower costs,” the spokesperson said.
The company thinks the terminal also provides benefits through synergies with its refinery operations. The gas terminal being adjacent to the Geelong refinery would leverage Viva’s capability as an existing major hazard facility (MHF) operator and the ability to reuse the FSRU seawater discharge in the refinery's existing operations.
Hydrogen-based mobility
In February, Viva announced it had entered a strategic alliance with Hyzon Motors, a global supplier of hydrogen fuel cell-powered commercial vehicles. Viva and Hyzon are working together to provide zero-emission vehicles coupled with hydrogen refuelling solutions to customers.
“The Hyzon alliance fits closely with Viva's intention to explore and develop future energy solutions at its energy hub in Geelong, and we are continuing to focus here as a business priority,” the spokesperson said.