AGL Energy Delays Decision on Floating Gas Import Terminal

AGL Energy has delayed a decision on a location for an up to $300 million Australian gas import terminal that it hopes would act as a pressure valve for tight east coast gas markets.

The Sydney-based energy company is studying the economics of a floating LNG import terminal in NSW, Victoria or South Australia that is says would be economic as east coast gas prices surge as Queensland LNG exports ramp up.

As recently as last month, AGL had said it was on track to name a preferred site by the middle of this year, but it has not met the target.

AGL now says the company is looking to decide on a location “in the next few months”.

AGL would not say why the original target had not been met.

“Before a site is selected, our investigations will include discussions with local communities about their questions and concerns, including managing risks from transporting hazardous materials, safety, security and environmental protection,” a spokes­man said.

“None of our plans include the use of trucks to transport gas. We see the proposed project as an important component of helping increase supply, competition and gas security in southeastern Australia and supporting our customers and industries with reliable, long-term gas supply.”

The import proposal was first floated by AGL chief executive Andy Vesey in November.

At the time, it drew scepticism because of the absurdity of the prospect that Australia, soon to be the world’s biggest LNG ­exporter from projects in Queensland, the Northern Territory and Western Australia, would need to import gas.

But with east coast gas prices tightening as three LNG plants in Gladstone increase capacity and triple east coast demand, and the cost of piping gas from Queensland to Victoria said to add up to 30 per cent to the price, the ­project is looking more viable.

AGL wants to underpin what would be a sizeable investment with long-term contracts.

The company is studying a regasification terminal that would cost $200m-$300m to install at a site that can be easily hooked up to the east coast gas network.

It is hoping for construction to start in 2019, with the terminal in operation in 2020-21.

In recent years, the development of floating storage regasification units, which are about the same size as the LNG tankers that pull up beside them and offload their cargo, has created new LNG demand in nations with existing gas infrastructure.

They have replaced import terminals that can cost billions of dollars and require large import volumes to underpin their construction.

AGL is understood to be keen for proximity to customers and the Iona gas storage plant in western Victoria, which could increase the appeal of Victoria’s Western Port Bay as a destination.

The storage plant, the subject of a court battle between QIC and Energy Australia, would allow AGL to take advantage of attractive spot LNG opportunities.