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Crib Point selected for Australian first LNG imports project (LU: 31-10-2017)
2017/08/10
AGL announced Crib Point (Western Port) in Victoria as the preferred site for a gas import jetty and pipeline to increase energy security and supply for customers in south eastern Australia.
AGL announced Crib Point (Western Port) in Victoria as the preferred site for a gas import jetty and pipeline to increase energy security and supply for customers in south eastern Australia. “Crib Point is best placed to serve Victoria, Australia’s largest gas market, as well as take advantage of the existing pipeline network, industrial port facility and associated infrastructure.”
“This doesn’t signal the end of the feasibility studies for the proposed site but now accelerates the process. We look forward to ongoing consultation with the local community to answer their questions and proceed towards a formal application to the Victorian Government.”
“If all goes to plan, AGL would invest roughly $250 million, commence construction in 2019 and bring the terminal into operation by 2020/21.”
“As the largest generator of electricity in the country, we’re working hard to deliver secure, reliable and affordable energy and increase competition in the east Australian gas market for domestic and industrial customers.”
Victoria, where the project would be, is part of the same East Coast Australian gas market that the Australia Pacific, Gladstone LNG, and Queensland Curtis LNG projects at the Port of Gladstone, Queensland, are connected to. In the years since their development (the first LNG cargo departed Gladstone in January 2015, from QCLNG), the East Coast Australia gas market has faced rising costs of domestic gas and forecasts of potential shortages by the end of the decade, according to Platts.
AGL said that its LNG imports project would have the potential, if required, to meet all of the households' and businesses' gas needs in Victoria as it will have a capacity of 100 PJ/year.
Meanwhile, Credit Suisse analyst Mark Samter said that he sees a "material opportunity" for those that can import LNG into the south-east, most obviously AGL, but also potentially others as the government's new Domestic Gas Security Mechanism perversely "appears to have opened the door clearly" for LNG importers by effectively enshrining higher prices in the east coast market.
Samter notes that the mechanism, by targeting Santos's GLNG venture, is based around the "netback" price of GLNG gas, which is the highest-priced gas exported from Queensland. At an oil price of $US60 a barrel, that netback price allows LNG to be imported into Victoria at a price that is more than $2.50 a gigajoule below the price of gas transported from Queensland, according to Credit Suisse's calculations.
AGL is yet to kick off the formal environmental approvals process for the venture as it focuses on community consultation at Crib Point, an industrial site with an existing jetty and pipeline easements. Also yet to be decided is the type of LNG import facility, although a spokesman said it would likely be a FSRU. "We will issue a tender towards the end of the year and let the market decide," AGL spokesman said, adding that a new 55-Km pipeline would likely be needed to connect the terminal to the grid, with a competitive tender also to be held for that.
Updates:


On 31-Oct-2017, Reuters reported that Australia's biggest power producer, AGL Energy, plans to import up to 2.5 MMT/Y of LNG to the southeast of the country, including spot cargoes from 2020 as the firm is preparing to line up medium- and long-term LNG supply in line with plans to build a A$250 million ($192 million) import terminal. "We might get to those levels out over the medium-to-long term, if the Gippsland-Bass Strait goes into decline, which it looks like it's doing."
The company added that it is talking to a number of overseas players, producers and LNG buyers, some of whom might be willing to sell their unwanted LNG volumes during their low demand periods to AGL because peak gas demand in Australia's cooler months in the middle of the year coincides with the low demand season in north Asia.
AGL needs gas for its retail customers as well as its own power plants. It depends heavily on supply from the Gippsland Basin joint venture, owned by ExxonMobil and BHP, and from Shell, which has been selling gas from Queensland. The company has started considering importing LNG after going through "very hard and difficult negotiations" with ExxonMobil and BHP to renew gas contracts for 2018 through 2020.
AGL aims to decide in 2018 whether to go ahead with the LNG import project, which would involve leasing a floating vessel to regasify LNG off the state of Victoria before piping the gas onshore. A tender will go out soon for a floating regasification and storage unit, AGL said.

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Source(s) AGL, AFR, GLNGI Staff