New modelling by energy consultancy EnergyQuest says unless Australia starts to import LNG it will face a major gas shortfall from 2022 as gas supplies in Victoria dry up.
The report said Australia needs to ramp up its development of LNG import terminals to increase gas supplies as Victorian gas reserves run low and NSW and Victoria face gas pipeline supply constraints from Queensland reserves.
LNG import terminals have been proposed as a measure to avoid domestic gas shortfalls in Australia.
“The east coast faces a double whammy of insufficient gas in both the north and south,” EnergyQuest chief executive Dr Graeme Bethune said.
He said NSW and Victoria needed to either lift their moratoriums on onshore gas exploration or speed up the progression of LNG imports to avoid a gas crisis.
Advertisement“Timing is critical and it is concerning that the regulatory processes in Victoria and NSW are dragging out, delaying decisions to go ahead with these new terminals,” he said.
“Here, we have investors willing to spend their own money to alleviate the east coast gas shortage but there does not appear to be any sense of urgency on expediting the approval process.”
The Australian Energy Market Operator and the Australian Competition and Consumer Commission previously forecast a gas shortfall for the east coast in 2019 and 2020 unless more gas was secured.
This led to the federal government threatening major gas companies with export restrictionsunless they ensured increased domestic gas supplies.
These supplies have helped alleviate the forecast shortage, with both AEMO and the ACCC not predicting any shortfalls until Victoria’s 2022 winter season.
Dr Bethune said opposition to LNG import terminals over concerns they would raise gas prices ignored the realities of the gas market.
“There are fears that such projects will lock the east coast into international gas prices but that has happened already,” Dr Bethune said.
“What will lock the east coast into even higher gas prices, however, are restrictions on new supply, LNG imports and exploration.
“Developing LNG import terminals sooner rather than later would be a prudent form of risk mitigation.”
While analysts support the need for LNG import terminals to lift gas shortages, they don't believe it will significantly drive down domestic gas prices.
Macquarie Bank analyst Andrew Hodge has previously said these import terminals will set a new price floor, with future prices built from this base.
It comes as South Korean firm EPIK signs a strategic partnership with Korean conglomerate Hyundai LNG to work towards a 1.5 million tonne per annum floating LNG import terminal at the Port of Newcastle, in NSW.
The project is valued at between $US400 million and $US430 million and is waiting on regulatory approval.
Mining magnate Andrew ‘Twiggy’ Forrest’s Australian Industrial Energy currently has the most progressed LNG import terminal, with plans to begin bringing gas into NSW’s Port Kembla, while power company AGL plans to import gas through Victoria’s Crib Point Terminal.
ExxonMobil is considering an LNG import terminal in Victoria while private company Venice Energy has proposed a $750 million to $800 million terminal at Port Adelaide, in South Australia.
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