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Australia Port Kembla LNG import project seeks to increase winter volume

Monday, 28 October 2019 | 01:00

A Japanese-backed consortium looking to import liquefied natural gas to Australia said it has sought to increase the volume it can ship in during the southern hemisphere winter, beyond what the state of New South Wales approved last April.

Australian Industrial Energy (AIE), the joint venture planning to build the berth for a floating LNG import facility at Port Kembla, said it is now seeking up to 46 shipments a year on variable-sized vessels, up from the approved 26 standard-sized vessels of 170,000 cubic metres each.

AIE is backed by Japan’s JERA, the world’s biggest LNG importer, as well as Marubeni Corp and Australian mining billionaire Andrew Forrest’s Squadron Energy.

The Port Kembla project, one of five proposed LNG import terminals in Australia, originally won approval to import about 2 million tonnes a year. The winter expansion would amount to a roughly 20% increase.

The new application means the earliest AIE could reach a final investment decision on the A$250 million ($170 million) project would be well into 2020, nearly a year later than it had first hoped.

AIE said the change would not require it to increase the size of the floating storage and regasification unit (FSRU) that will be moored at Port Kembla to process the LNG.

It just wants to be allowed to increase the number of shipments in the winter months, when gas demand peaks in southeastern Australia and LNG prices in north Asia are cheapest, Squadron Chief Executive Stuart Johnston told Reuters in an interview last week.

AIE said it would have to submit environmental and hazard studies as part of the modification application, but gave no timeframe for the process. The state typically takes at least a few months to review modification applications.

AIE has previously said it could start delivering gas within 16 months of making a final investment decision.

So far it has only lined up one customer, EnergyAustralia, the country’s third-largest energy retailer, to take 15 petajoules over five years.

It wants to secure more customers before making a final investment decision, but said potential users want to make sure it has the government approval in hand for the expanded volume.

“People are not going to finalise their commercial arrangements with us until they know we can build and execute,” Johnston said.
Source: Reuters (Reporting by Sonali Paul, Editing by Sherry Jacob-Phillips)

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