Falling production at a large plant and a forecast slide in supply from fields off the south-eastern coast is adding to the anxieties of major users.
Already a subscriber?Falling production at one of the country’s largest gas plants and a forecast slide in supply from fields off the south-eastern coast is making increasingly inevitable what had been dismissed as unlikely development only a few years ago: the need to import LNG.
But that may be coming. ExxonMobil, the operator of the Longford plant east of Melbourne, has flagged it would close the facility, which processes gas from nearby offshore fields operated by its partner Woodside. “Otway plus Longford equals a problem,” said one gas industry executive, who spoke on condition of anonymity, as they were not permitted to comment on the matter. There was increasing interest in LNG imports among industrial gas users, he said.Australia does not yet import gas. It is one of the world’s largest LNG exporters from ports in Western Australia, Queensland and the NT, thousands of kilometres away from where domestic demand is greatest – the country’s southeast.
The Coalition, meanwhile, is hoping to use gas to keep energy bills affordable for the 13 years before the first of seven nuclear reactors it has proposed comes online.One major impediment to importing gas, however, is the price. At current spot LNG pricing, imports would cost $20 a gigajoule, over 30 per cent more than domestic prices.
“Overall, we’ll need more supply into the market, particularly to service those .... southern states,” he said last week. “And, looking at the timing of that supply and those constraints on the pipeline, we certainly feel that LNG imports are going to play a major role to secure or reliability of gas supply in those markets.”
, also declined to comment. It buys about 20 petajoules a year of gas to supply its retail customers and three power stations in NSW and Victoria. A fourth gas-powered generation station, in Kurri Kurri near Newcastle, is due online in December.
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