LNG

Australia's AGL Energy has pushed its case for regulatory approval for its liquefied natural gas import project at Crib Point in southeast Australian in the largest ever environmental assessment inquiry held in the state of Victoria.

Australian utility AGL Energy is progressing with the LNG import terminal and has submitted for public comment its environmental impact statement for the facility at Crib Point on Westernport Bay, south of Melbourne in the state of Victoria.

The AGL environmental statement will be open for public comment until the 26th of August 2020.

Subject to clearance, AGL hopes to make a final investment decision on the Crib Point project around the end of this year.

A second LNG project aimed at bringing in more natural gas to another area of the nation threatened with gas supply shortages in the southeast is being developed by Australian Industrial Energy (AIE) in the state of New South Wales at Port Kembla, south of Sydney.

That project is backed by the world’s largest LNG purchaser, JERA Co. Inc. of Japan, the Japanese trading house Marubeni Corp and Australian mining billionaire Andrew Forrest’s Squadron Energy.

The Crib Point project in in Victoria has a price tag of A$300 million (US$208M) and involves a floating terminal moored at a newly constructed jetty for LNG carriers making deliveries.

The venture also includes a 55-kilometres natural gas pipeline to the Melbourne satellite town of Pakenham to connect to the Victorian gas grid.

AGL said construction could begin in 2021 and the project brought on stream by 2023, in time to help meet the shortfall of gas supply forecast for Australia’s southeast market.

The project faces opposition from environmental groups as well as residents concerned about potential risks to the Westernport region’s tourism.

The Crib Point proposal requires approval from both the Victorian state government and the federal government in Canberra.

The AGL plan is one of two similar projects proposed in Victoria following Viva Energy’s announcement in June 2020 of its ambitions to transform the site of its Geelong oil refinery into an energy hub that would include an LNG import capability.

AGL is based in Sydney and is one of the nation’s main utilities, offering electricity and gas services in NSW, Victoria, Queensland and South Australia.

It is also investing in renewables, peak-shaving and storage and has other major projects across Australia in addition to the LNG terminal.

AGL’ submission of its environmental report has coincided with a statement from AGL Chief Executive Brett Redman to his customers offering carbon-neutral energy and pledging the company’s commitment to the transition but at a logical pace that will keep the lights on.

“As Australia’s largest and oldest integrated electricity generator and retailer, we play a vital role in Australia’s energy market and the wider transition,” said Redman.

“Not only do our coal and gas fired generators ensure Australia’s lights remain on, they provide the financial strength for AGL to progress the transition,” he added.

“I am proud of the role our employees at all of our generation sites play, particularly as demonstrated during the recent crisis,” he stated.

“What the crisis has reinforced for us is that we need to continue to embrace change, innovate and move with speed in order to evolve as an organisation, drive transformation in our industry and provide the community with the type of essential service they need,” explained Redman.

“Many of our customers share our interest in shaping a more sustainable future. So, it’s important to provide them with options and that’s what our new carbon neutral product does - regardless of whether they are a family, a small business or a large commercial or industrial customer,” he said.

“To support this new product into the future AGL has embedded changes in our policies, supply chain and systems to ensure a carbon neutral option is offered every time a customer chooses an AGL electricity, gas or telecommunications product,” added Redman.

“We accept the science of climate change. The more difficult aspect that needs to be addressed is how we manage the transition in a way that reduces emissions and supports our customers and the community," said the CEO.

“I believe that Australia and Australians have the capability and the capacity to achieve transition in our energy market in a way that drives us forward, unlocks the potential of new technology and creates new industries and opportunities,” he concluded. 

Hoegh LNG, the Norwegian LNG fleet owner and project developer, posted lower profits and higher revenues in the first quarter as it expects four new regasification ventures, two of them in Australia.

Hoegh reported first-quarter net profits of $4.51 million compared with $13.21M in the same three months of 2018.

The company said the decrease in profits was the result of lower earnings from the amended contract for the “Höegh Gallant” floating storage and regasification charter with Egypt Natural Gas Holdings Company at Ain Sokhna port in the Gulf of Suez and higher depreciation and interest expenses.

Hoegh’s total quarterly revenues rose by 16.5 percent to $84.29M from $72.29M in the same quarter of 2018. Operating profit was $29.74M versus $26.79M in the year-ago quarter.

In its operations and marketing, Hoegh said it won exclusivity and had been selected for a total of three FSRU contracts.

“Of these, two developments are based in southeast Australia while the third addresses a south Asian market. In addition, the group remains involved in the final round for one ongoing FSRU tender,” said Hoegh.

The Norwegian company was selected during December 2018 by a subsidiary of AGL Energy as the FSRU provider for its LNG import facility under development at Crib Point in the Australian state of Victoria.

The signed time charter party (TCP) is for a period of 10 years with anticipated start-up in 2020-2021.

“The contract remains conditional on a final investment decision by AGL in relation to the project, and on the receipt of key regulatory approvals,” said Hoegh.

The FSRU assigned to the Crib Point project is expected to generate annual earnings of between US$29M and US$31M, depending on planned technical modifications which may be specified by AGL before project start-up.

The most likely FSRU candidate for this project is the “Hoegh Giant” FSRU.

Hoegh added that it had achieved exclusivity for the Australian Industrial Energy (AIE) import project at Port Kembla in Australia.

AIE has received a development consent award from the New South Wales government, meaning the project is ready for construction subject to a final investment decision.

AIE intends to install an FSRU to supply the New South Wales natural gas market and is backed by a consortium consisting of Squadron Energy, owned by Australian industrialist Andrew Forrest, JERA Co. Inc. of Japan, the largest buyer of LNG in the world, and Japanese trading house Marubeni Corp., a major trading and investment firm.

Hoegh plans to use its FSRU No.10 for this project. The latest vessel is scheduled for delivery from the Samsung Heavy Industries shipyard in South Korea by August 2019,

“Progress has also been made by the third project to which the group has been granted exclusivity. Intended for a south Asian market, this is in the process of securing the operating permits it needs and a final investment decision,” said Hoegh without disclosing the name of the other party nor its exact location.

The fourth project, where Hoegh is in the final selection round, is targeting a decision by mid-2019.

Hoegh said it was additionally involved in several other tender processes at various stages of development.

“China remains a key focus area, since growth in regasification capacity has lagged behind the increasing demand for natural gas for the Chinese market,” stated Hoegh.

The company also noted that its FSRU “Independence” deployed on the Baltic coast of Lithuania successfully underwent its first class-renewal survey while afloat in Klaipeda harbour.

“Since the survey was performed without the requirement to re-position to a dry dock, time out of service was minimised,” said Hoegh.

“The ‘Independence’ is now approved for another five years of service until its next renewal survey, which comes up in 2024,” added the company.

Hoegh said that three other vessels, the “Hoegh Gallant”, the “Neptune” in Turkey and the “FSRU Lampung” in Indonesia, will undergo their five-year class renewal surveys later this year.

“While ‘FSRU Lampung’ and ‘Neptune’ are to be surveyed afloat, the ‘Hoegh Gallant’ will be dry-docked since it currently trades as an LNG carrier,” added Hoegh.