Page 5 - AsiaElec Week 45

AsiaElec COMMENTARY AsiaElec
Australia, partly because certain LNG exporters are starting to divert more gas to the domestic market. Santos reported higher gas sales to the domestic market in the third quarter of 2019. Meanwhile, Australia Pacific LNG (APLNG) struck a deal to supply 61 petajoules (1.6bn cubic metres) of gas to Origin over a two-year period starting in January 2020. And Royal Dutch Shell has also been involved in efforts to boost gas sup- ply to the domestic market.
These diversions of gas to the domestic mar- ket have dealt a blow to the proposed import ter- minals, as potential buyers opt to buy pipeline gas instead.
Under these circumstances, AIE continues to pursue talks with Origin, but one of the Reuters sources said that the latter wanted an equity stake in Port Kembla, with this proving to be a sticking point. Origin, however, denied that it was seek- ing to invest in the project, despite confirming that it had been in discussions with AIE, among others, about gas supply.
What next?
AIE had been hoping to launch Port Kembla ahead of rival import projects being developed in New South Wales, Victoria and South Australia. Currently, all these other projects are targeting start-up dates in 2021-23.
AGL Energy has also been hit by delays to
its plan, as it undergoes an extended environ- mental review of its Crib Point import project in Victoria.
Squadron’s Johnson said the Port Kembla facility could be delivering gas within 16 months of an FID, suggesting the project is now likely to start up no earlier than 2021.
The start-up of these import terminals – assuming they come to fruition – will be timely, given that the mature Gippsland Basin, a major source of gas supply for south-east Australia, is expected to experience steeper decline rates from 2023.
Plans to import LNG even as Australia’s exports of the fuel rise have been criticised for their economics compared to building more domestic pipelines. And indeed exporters’ efforts to divert more gas to the domestic market appear to be gathering momentum, which could spur the development of new pipelines as well.
But despite increased availability of domes- tic gas and the resultant cooling demand from would-be buyers for gas from Port Kembla currently, it appears that in the longer run the demand for imported gas will be there. This is backed up by warnings from the Australian Energy Market Operator’s (AEMO) annual gas outlook, which was published earlier this year and painted a bleaker picture than the previous year’s forecast.™
Week 45 13•November•2019 w w w . N E W S B A S E . c o m P5