Support from industry, business and community leaders was cited as one of the key reasons a consortium chose Port Kembla as the first LNG import terminal in NSW.
Fortescue Metals chairman Andrew “Twiggy” Forrest’s Australian Industrial Energy (AIE)
has signed an agreement with NSW Ports to build a $200m-$300m floating liquefied natural gas import terminal at Port Kembla, expected to deliver gas to NSW and Victoria by 2020.
Wollongong City Lord Mayor Cr Gordon Bradbery AM said the announcement was an exciting opportunity for Wollongong.
“This will further support our local manufacturing and heavy industry and put downward pressure on energy costs for local businesses by creating competition in the energy supply chain. Any competition in this space is most welcome,” Cr Bradbery said.
AIE is led by the former Santos and Duet Group executive James Baulderstone and Stuart Johnson, the head of Mr Forrest’s gas business, Squadron Energy. The consortium has the backing of Japanese infrastructure investor Marubeni Corporation and JERA Co Inc, the world’s largest buyer of LNG.
In announcing the location, Mr Baulderstone told a media conference “strong local support” for the project was a deciding factor, along with access to existing pipeline infrastructure, Port Kembla’s berth configurations and the proximity of large industrial consumers.
The Port Kembla Gas Terminal will be able to supply more than 100 petajoules a year, enough to meet about 70 percent of NSW’s total gas needs. It will generate about 150 jobs during construction and 40-50 ongoing roles when operational.
Further to the official launch, AIE has since announced the Floating Storage and Regasification Unit (FSRU) will be supplied under charter contract from the global leader in the development and operation of modern FSRUs – Norway’s Höegh LNG.
Under an Exclusivity Agreement with Höegh LNG, AIE has the right to lease one of Höegh LNG’s state of the art 300 metre long 170,000m3 FSRUs, which will be permanently moored at Berth 101 in Port Kembla’s inner harbour for the duration of the contract.
JERA buys almost 15 percent of global gas and says it can source the cheapest LNG for the venture, leading to more choice for consumers and lower prices. Kensuke Oyama, senior manager at the company’s gas and power development team, said JERA’s strength in the LNG market would ensure “very competitive” prices.
The consortium has already signed 12 Memorandums of Understanding (MoUs ) with major industrial customers.
Mr Baulderstone said AIE was working to make the project a reality “as quickly as possible”.
“NSW is facing significant challenges in ensuring available and affordable gas supplies,” he said. “In recent times wholesale gas prices have doubled and, in many cases, tripled in NSW. Many industrial companies are unable to secure gas for any period longer than 12 months.
“The world-leading expertise of the AIE partners, now combined with the enthusiasm of NSW Ports and the Illawarra’s regional business community to see this project realised, means AIE is well placed to deliver firm, long-term gas on highly competitive pricing and terms as soon as 2020.”
NSW Ports CEO Marika Calfas said the project would broaden Port Kembla’s scope and lead to diversification in port activities with the potential for new, value-add services in the region.
Advantage Wollongong supported the AIE proposal and coordinated briefings with interested local parties in April 2018.
The Illawarra Business Chamber, Australian Industry Group and business network i3net also backed the project, saying the import terminal would significantly assist in overcoming energy supply and pricing challenges.
AIE is also investigating the development of a gas-fired electricity generation plant locally which could play a key role in securing electricity supply.