Europe’s dash for gas puts Australia’s LNG import plans at risk By Reuters

By Sonali Paul and Florence Tan

MELBOURNE (Reuters) – European race to replace Russian gas supply has threatened Australia’s plans for five gas import terminals as they compete for key infrastructure, raising the risk of a supply shortfall in the populous South. east of Australia in the next two years.

France, Germany and the Netherlands, among others, will have to import liqueur (LNG) to replace piped gas from Russia, which has been hit by sanctions during the Ukraine conflict.

European users are grabbing the floating storage and regasification units (FSRUs) needed to convert LNG to gas, leaving little for Australian import projects to fill a gas supply gap planned for 2024.

“Europe is taking all the spare LNG volumes out there and any floating LNG irrigation capacity. So there is no surcharge irrigation capacity for Australia,” said Credit Suisse analyst Saul Kavonic.

Although Australia is the world’s largest exporter of LNG, its major gas fields are far from Sydney and Melbourne and other major Southeastern cities, and production is mostly tied to contracts with Asian users.

Therefore, the country is making progress with LNG import projects, but most have not yet reached the stage of blocking customers or regasification infrastructures, and European users are receiving FSRU.

Viva Energy of Australia, which this year aimed for a final approval for an LNG import terminal in Geelong, near Melbourne, lost its temporary reservation of a Hoegh LNG FSRU to a German user. said Meg, CEO of Woodside (OTC 🙂 Energy Group Ltd. O’Neill.

Woodside, one of Australia’s leading independent gas producers, has an interim agreement to supply LNG to the Viva terminal.

“I think one of the things that will be a challenge is the availability of floating storage irrigation units, the FSRUs,” O’Neill told Reuters on the sidelines of the World Gas Conference in Daegu, South Korea. last week.

“So I’m a little worried, in fact, that what has happened in Europe will delay these opportunities in Australia.”

Viva, who is awaiting Victoria State environmental approval for her terminal, said she is still in talks with Hoegh.

Hoegh LNG did not comment on Viva’s situation, but said in e-mailed comments that its existing fleet will be used in projects in which the company has made “firm commitments.”

The company announced on May 5 two FSRU commitments with the German company RWE, while Dynagas, based in Greece, announced two units for the German company Uniper.

The five proposed LNG import terminal owners in Australia – Viva, Squadron Energy, Venice Energy, Vopak and EPIK – told Reuters they were working on their projects when asked about the challenges in securing FSRUs. .

Construction has just begun: Squadron is building the Port Kembla power terminal, which aims to be ready for the first gas by the end of 2023 with a Hoegh Galleon FSRU rented for the site.

“The infrastructure will be in place. However, when the first gas flows depend heavily on customer requirements,” Michael Shaw, Acting General Manager of Squadron, said in e-mailed comments.

Venice Energy’s Outer Harbor LNG project in South Australia is working with Greek LNG company GasLog on plans for an FSRU, which could involve the conversion of an LNG carrier.

Venice expects to have an FSRU by the second quarter of 2024, but that will depend on the availability of the shipyards, said President Kym Winter-Dewhirst.

“What we’re seeing is the pressure on shipyards for conversions: this is where we’re seeing more pressure,” he told Reuters.

However, finding a newly built FSRU instead of renting an existing boat would lead to long delays.

“If you applied for an FSRU today, you can receive one by 2026 as soon as possible,” Hoegh LNG told Reuters in an email.

Australia’s competition regulator warned in March that without LNG imports, the South East market would face a deficit from the winter of 2024.

“What is even more worrying is that in 2026 or 2027 we expect a deficit along the entire east coast,” Australian Competition and Consumer Commissioner Anna Brakey told a conference in March.