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Australia finds itself at gas supply crossroads
Developers are working to finalise plans for the country’s first LNG import capacity amid a boom in exports
COMMENTARY
WHAT:
Five LNG import projects have been proposed for the East Coast market.
WHY:
Gas shortages could appear in the south-east within the next five years.
WHAT NEXT:
Some form of national gas reserve policy seems inevitable.
AUSTRALIA is At a crossroads as it decides its energy future. The country is a major natural gas producer, output of which has boomed over the past years to meet ever-increasing demand from buyers across Asia.
That growth, however, created outrage on the domestic front. Public anger over windfall prof- its, hydraulic fracturing and soaring domestic gas prices has beset the natural gas industry over the past decade. Now the sector needs to prepare for an imminent public and political backlash over proposed plans to establish import capacity in the world’s largest exporter of LNG.
The Australian petroleum sector previously misjudged public outrage over fracking, assum- ing that existing scientific studies showing that risks could be managed would be enough to convince politicians that the technology was safe to employ. But the green and agricultural lobbies proved more tenacious and media friendly, and won a convincing victory that lead to moratoria springing up across the country. In Victoria, not only has fracking been banned but so too has conventional onshore exploration.
The industry as a whole needs to prepare for the inevitable fallout when industrial and
residential buyers unite to apply pressure on government over the perception that Austral- ian buyers are being exploited by having to import gas when the country is the world’s lead- ing exporter. If the developers, exporters and importers do not figure out a suitable response and soon, then voter outrage will likely see the government make the entire industry a scape- goat and adopt kneejerk policies.
Import situation plans
Australia has five LNG terminals proposed for its south-east region, which has seen natural gas prices soar as three gas export projects came online in Queensland.
South Korean LNG developer Epik announced on November 6 that it had hired ANZ to advise on its Newcastle GasDock LNG import project in New South Wales. The bank will provide debt and equity advisory services as Epik gears up to take a final investment decision (FID), which is expected in the middle of next year.
As with the other four projects, Epik intends to install a floating storage and regasification unit (FSRU) as well as associated infrastructure. The
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