EnergyAustralia has reached an agreement to purchase gas from the in-development Port Kembla Gas Terminal (PKGT).
The value of the deal is expected to be more than $500 million.
The $250 million PKGT was granted planning approval by the New South Wales Government in April this year, with AIE aiming for construction to be completed by late 2020.
Speaking on behalf of the AIE joint venture partners – Squadron Energy, Marubeni Corporation, and a joint venture between Tokyo Electric and Chubu Electric – Squadron Energy CEO Stuart Johnston said the gas supply agreement showed the import terminal is a “real solution” to projected gas supply shortages.
“We have negotiated a market competitive, oil linked price with EnergyAustralia,” he said.
“It’s an agreement that provides their business with certainty in the face of increasingly challenging domestic gas market supply.
“AIE is deep in negotiations with a range of industrial businesses looking to sure up supply over the coming years.”
EnergyAustralia Executive of Markets Ross Edwards said new gas supplies were “desperately needed”.
“Natural gas remains a big part of Australia’s supply mix and it has an important role to play in a modern, cleaner energy system, alongside renewables and technologies like batteries and pumped hydro,” he said.
“We think commercial, market-based solutions are the best, most efficient way to fill the supply gap and ease pressure not just on gas prices, but power prices, too.”
There are several LNG import terminals in development across Australia’s east coast, but the PKGT is the clear front runner to get gas to market first, particularly with competitor AGL facing political opposition in Victoria for its Crib Point project, while EPIK’s Newcastle LNG Project is shooting for regulatory approvals in 2020.
AIE is expected to make a final investment decision on the project in the next few months.
Squadron Energy is led by prominent Western Australian businessman and billionaire Andrew Forrest.
For more information visit the AIE website.
If you have company news you would like featured in The Australian Pipeliner contact Assistant Editor David Convery at firstname.lastname@example.org