Australian Industrial Energy has secured the country's first floating LNG import ship which could help lift pressure on the forecast gas shortage in 2020.
Norwegian firm Hoegh LNG – one of the largest global suppliers of floating regasification units – has signed an agreement with AIE to bring a floating import terminal to Port Kembla in NSW. This new agreement puts AIE on the path to have new gas pumping into NSW and Victoria in 2020.
The floating terminal will take imported LNG, re-gasify it, and inject it into pipelines that will transport it to the east coast gas network 10 kilometres away.
“This [ship] is the heart and soul of the import terminal project,” AIE chief executive James Baulderstone told Fairfax Media.
Under the agreement, AIE will lease one of the 300-metre long vessels, which will be permanently moored in Port Kembla’s inner harbour.
It comes after the $200 million to $300 million project was fast-tracked by the NSW government, after being declared a critical infrastructure project due to its impact on energy security.
“We have an option on two existing vessels [from Hoegh LNG],” Mr Baulderstone said.
“One is being built and will be ready for 2019, the other is already being used as an import terminal.”
He said building a new vessel has an 18-month lead time, so both options are on the table.
AIE plans to bring in about 1.8 million tonnes of LNG into Port Kembla annually, enough to supply two million homes for a year.
The import terminal is part of AIE’s final port infrastructure design plans and also addressed the NSW’s government’s planning assessment and development approval requirements.
Receiving the final approvals from the NSW government will allow AIE to make a final investment decision on providing gas to industrial customers from the first quarter of 2020.
Mr Baulderstone said AIE has already signed 15 memorandums of understanding with major energy users, such as manufacturers, across NSW and Victoria and is aiming to shift these agreements into binding commitments within the next two to three months.
He said the project would provide certainty and security of gas supply ahead of a forecast shortage, and could provide backup fuel for the growing level of intermittent renewable energy.
“We remain on schedule to deliver gas to our industrial customers during early 2020. Our schedule coincides with the expected significant tightening of the east coast gas supply market, especially for major industrial users.”
Australian Industrial Energy is jointly operated with Fortescue Metals chairman Andrew Forrest’s Squadron Energy.
This consortium has the backing of major Japanese energy firms Marubeni Corp and JERA, which is the world’s largest buyer of LNG.
JERA is supplying the LNG for the project while Marubeni is providing the infrastructure financing.