Australia’s domestic natural gas shortages on the largely populated east coast are helping fuel demand for four LNG import projects, placing one of the world’s largest gas exporters on track to become an importer by 2026.
As fields that have typically fed domestic markets continue to decline, the supply outlook for Australia’s east coast declined. The Australian Competition and Consumer Commission reported last fall that the country’s risk of gas shortfalls would increase after 2026.
Specifically, Victoria, New South Wales, South Australia and Tasmania are likely to be facing frequent gas shortages by 2027, according to the Australian Energy Market Operator (AEMO). The AEMO has backed plans for LNG imports, citing a reduction in the need for demand curtailments over the next decade.
EnergyQuest CEO Rick Wilkinson told NGI it isn’t a coincidence that Australia’s four liquefied natural gas import projects are aimed at connecting to the country’s east coast gas network.
There haven’t been any advanced plans for import facilities on the west coast, Wilkinson said, because of the market regulations that allow western states to divert LNG feedstock gas into the domestic market.
In EnergyQuest’s 2023 East Coast Gas Outlook, analysts wrote long-term gas demand could fall 60% from 2022 levels by 2042. However, without alternative supply like LNG imports, the region is expected to see shortfalls by 2028.
The 1.1 million metric tons/year (mmty) Outer Harbor LNG, also referred to as Port Adelaide LNG, could be the first floating storage and regasification unit to reach startup in Australia.
Outer Harbor LNG, developed by Venice Energy and Origin Energy, could provide backup to wind and solar power generation for nearly 30% of the year in South Australia. Greek shipping company GasLog would supply the FSRU.
The companies disclosed earlier in the month that installation of the unit could begin before December after Origin, one of the region’s largest electricity providers, signed a framework agreement to become a primary customer.
Outer Harbor would “deliver gas into local and interstate gas networks, thereby reducing forecast gas shortages in the southeast of Australia from mid-2026 and beyond,” Venice’s Managing Director Kym Winter-Dewhirst said.
Two FSRU import projects are proposed for the Australian state of Victoria. One, supplied by Dutch storage tank firm Royal Vopak NV, is planned to provide 4.7 mmty of import capacity at Port Phillip Bay near Melbourne.
A second import project has been proposed by the owner of the Geelong oil refinery, Viva Energy. Viva, a unit of Vitol SA, has outlined plans to moor a 2.5 mmty FSRU on an extension of the refinery's pier. Both projects are working through environmental reviews.
Squadron Energy’s 2.4 mmty Port Kembla facility in New South Wales (NSW) is reportedly nearing completion. Squadron leased the Hoegh FSRU Galleon, with the facility’s capacity able to supply more than 70% of NSW’s gas needs. Startup is slated for late 2025 or early 2026.
Several proposed projects have been rejected by local governments in the past, but with predicted risk of gas shortages nearing and some states reluctant to approve development of local gas resources, support for LNG import facilities have been gaining traction.
The Association of Australian Energy Producers, however, has voiced opposition to import plans, arguing that relying on import facilities ultimately raises costs for industry and consumers while ignoring long-term solutions like increasing domestic production.
Consumers in Victoria and NSW, the association said in a recent statement, “will end up paying more to import gas from interstate after their state governments have overseen more than a decade of development bans and regulatory uncertainty instead of enabling their own gas to be extracted.”
