Would import 140 pj/yr of gas at most -markets chief Wrightson...

• Would import 140 pj/yr of gas at most -markets chief Wrightson
• Wants to boost competition for local gas supply
• Aims to lock in some LNG term contracts
• Sees opportunity to buy cheap spot LNG cargoes

Australia's biggest power producer, AGL Energy (AGL), plans to import up to 2.5 million tonnes a year of liquefied natural gas (LNG) to the southeast of the country, including spot cargoes from 2020, a senior executive said.

In a move that would ease the grip of fuel supply majors on the market, AGL's wholesale markets head Richard Wrightson told Reuters in an interview 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 will not fully contract the capacity. We want the flexibility to buy cheap spot gas if available," said Wrightson.

That flexible approach is designed to reduce the risk of financing the project, once viewed as improbable given Australia's ample resources mean it is set to become the world's top exporter of LNG.

AGL is also Australia's no.2 energy retailer. Its import project - a leased floating storage and regasification unit and jetty at Crib Point in the state of Victoria - would handle up to 130 to 140 petajoules (PJ) a year eventually, or up to 2.6 million tonnes of LNG a year.

"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," said Wrightson, referring to the main source of gas supply to Australia's south. Output from that source is expected to drop 26 percent in 2018, the country's consumer watchdog flagged last month.

"But we'll probably start it with less volume than that," Wrightson said.

The company 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, Wrightson said. He didn't identify potential suppliers by name.

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 Corp and BHP (BHP), and from Royal Dutch Shell , which has been selling gas from Queensland.

The company 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, Wrightson said. ($1 = 1.3041 Australian dollars)