South Korean developer EPIK, based in Seoul, has proposed the establishment of a floating LNG import terminal at the Port of Newcastle north of Sydney on Australia’s east coast.
EPIK has signed an agreement with the Port of Newcastle to conduct preliminary work on the project, which is expected to cost as much as $430 million (Aus.), including onshore infrastructure.
The company noted that based on its assessment of the New South Wales gas market, particularly in east coast centers like Newcastle and Sydney, the new low-cost floating storage and regasification unit (FSRU) terminal will be viable. It will provide an infrastructure capable of providing a cost-effective source of alternative gas supplies to the region on a long-term basis.
The capacity of Newcastle LNG will be about 1.5 million tonnes/year. It would be the fifth LNG import terminal proposed to satisfy Australia’s future east coast demand—following one proposed for South Australia, two for Victoria, and one for New South Wales. However, analysts question the viability of multiple import facilities.
Adelaide-based consultancy EnergyQuest says that total domestic supply did fall by 18.8 petajoules in the September quarter because of lower production from Bass Strait, although this was offset by a 25% (or 16.6 petajoule) decline in gas use as coal and renewables replace gas in electric power generation. It is a trend that EnergyQuest expects will continue well into 2019.
On the other side of the argument, the consultant casts doubt on the ability of Queensland’s gas reserves to continue to make up the perceived future supply shortfalls further south along the east coast. This has increased the perceived urgency and economic sense for the establishment of LNG import terminals at Port Kembla south of Sydney and at Crib Point on Western Port Bay in Victoria.