AIE consortium plans LNG import terminal for New South Wales

June 11, 2018
A consortium of Japanese energy majors and Australian billionaire Andrew Forrest has proposed that Port Kembla on the New South Wales coast near Wollongong is the preferred site for a new LNG import terminal that would bring gas to the New South Wales market.

A consortium of Japanese energy majors and Australian billionaire Andrew Forrest has proposed that Port Kembla on the New South Wales coast near Wollongong is the preferred site for a new LNG import terminal that would bring gas to the New South Wales market.

The terminal, with a construction cost of be $200-300 million (Aus.), would source gas from Southeast Asia, the US, and other parts of Australia to supply more than 100 petajoules/year of gas to New South Wales, sufficient to cater for 70% of the state’s demand.

The consortium, known as Australian Industrial Energy (AIE), is made up of JERA Co. (itself a joint venture of Tokyo Electric Power Co. and Chubu Electric Power Co.), Marubeni Corp., and mining magnate Andrew Forrest.

AIE is negotiating a series of memoranda of understanding with as many as a dozen sellers around the world for supply of LNG to the terminal on a timeframe that could make that gas available in New South Wales by 2020.

The consortium is considering the charter of an existing LNG carrier for supply runs.

Consortium Chief Executive Officer James Baulderstone, a former Santos Ltd. executive, said the choice of Port Kembla above two other contenders—Port Botany near Sydney and the Port of Newcastle on the northern New South Wales coast—was a heartland of manufacturing and an ideal location with nearby steelworks and other major industries.

AIE also is studying plans to build a gas-fired electric power station in the region.

The Port Kembla LNG reception terminal scheme has the full backing of the New South Wales state government. Trade and Industry Minister Niall Blair referred to the project as a game-changer for industry and jobs for the state.

The concept is the second of its kind for Australia after Sydney-based gas and electricity provider AGL Energy announced in August 2017 that it had chosen Crib Point, near Hastings on Western Port Bay in southern Victoria, as its preferred site for a gas import terminal, jetty, and pipeline to take advantage of the existing pipeline grid, industrial port facility, and associated infrastructure (OGJ Online, Aug. 10, 2017).

Once the location of BP’s Western Port refinery, Crib Point is close to the ExxonMobil-BHP Billiton gas and oil facilities at Long Island Point that are connected by pipeline to the JV’s Longford processing plant in Gippsland and on into Victoria’s gas distribution network.

With a similar price tag of $200-300 million (Aus.) to the AIE consortium plant, AGL’s concept includes a regasification terminal able to receive 2.5 million tonnes/year of LNG (either shore-based or possibly a floating storage and regasification unit) as well as connections into the gas supply pipeline grid. A final investment decision is expected this year with construction beginning in 2019 for the terminal to be in operation in 2020-21.

Both the New South Wales and Victoria schemes have been spurred by the perceived looming gas shortage along Australia’s populous east coast.