LNG

A substantial 13 GW of nuclear capacity built by 2051 is meant to replace coal generation in Australia, if the Liberal National Party (LNP) wins the federal election in early May. The incumbent Labor government targets 82% renewable energy – though short-term grid stability hinges on dispatchable gas power plants, partly fuelled by imported LNG.

Australian energy infrastructure company Jemena is starting work on the upgrade of the Port Kembla lateral pipeline for the nation’s first LNG regasification facility being deployed to strengthen the security of gas supply for the state of New South Wales and the East Coast gas market.

Australian gas customers could be shielded from future shortages on the east coast by bringing gas directly into New south Wales (NSW) via the soon to be completed Port Kembla Energy Terminal (PKET), developer Squadron Energy claimed.

Höegh LNG Holdings Ltd and Australian Industrial Energy have signed a final charter deal for the deployment of a floating storage and regasification unit at Port Kembla south of Sydney to help ease energy shortages in the state of New South Wales.

Höegh LNG Partners, the US affiliate of Höegh LNG Holdings now partnered with the infrastructure unit of US investment bank Morgan Stanley, has seen its shares plunge over 60 percent after the dividend was slashed.

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.

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Australian Industrial Energy and two Japanese partners building the first Australian liquefied natural gas import terminal at Port Kembla to bring in shipments of LNG for the state of New South Wales by 2020 have received their first firm order at oil-linked prices.

AIE, part of the Minderoo investment and mining group, has joined with Japanese companies Marubeni Corp. and JERA Co. Inc. to develop an LNG import facility near Sydney to make up domestic natural gas shortfalls during peak demand periods on the southeast Coast.

The Port Kembla floating import terminal joint venture said the first order had come from EnergyAustralia, the nation’s third-largest utility.

Port Kembla is an existing industrial cargo port with man-made breakwaters about 100 kilometres south of Sydney in the Illawarra region.

The Port Kembla terminal will initially handle around 2 million tonnes per annum of LNG.

AIE said it had agreed to supply 15 petajoules a year of natural gas, or around 400 million cubic metres, to EnergyAustralia over five years starting from January 2021 at oil-linked prices.

Analysts said this was more lucrative for the sellers at a time of solid oil prices over $70 a barrel rather than natural gas benchmarks such as the Henry Hub used in US LNG sales deals.

“It’s an agreement that provides their business with certainty in the face of increasingly challenging domestic gas market supply,” said Stuart Johnston, Chief Executive of the AIE subsidiary, Squadron Energy.

AIE is seeking to secure customers before making a final investment decision on the A$250 million (US$170 million) project.

The NSW Government has already given planning approval for the AIE-led venture comprising a floating storage and regasification unit (FSRU), a wharf infrastructure and a pipeline to connect to the existing NSW East Coast gas network.

The Port Kembla project believes that once operational, the terminal could supply 70 percent of the state's annual gas demand and help to ease the cost of energy bills for the 33,000 businesses and a million households in NSW that depend on natural gas.

The project is led by the Minderoo group, controlled by Australian billionaire Andrew Forrest.

Marubeni, a long-standing global LNG market participant, is also taking part along with JERA, now the largest Japanese utility company after being formed as part of a merger between many assets owned by Tokyo Electric Power Co. and Chubu Electric.

The choice of Port Kembla was the result of a joint feasibility study launched in February 2018 when the joint venture was first established.

The LNG terminal is regarded as a lower-cost alternative to a proposed Australian inter-state pipeline from West to East at a cost of around A$5 billion.

At least two other LNG regasification ventures are moving forward in NWS and in the southeast state of Victoria.

Australian Industrial Energy and two Japanese partners have advanced with plans for the first Australian liquefied natural gas import terminal at Port Kembla to bring in shipments of LNG for the state of New South Wales by 2020.

A South Korea-based liquefied natural gas project company has signed an agreement with Australian building contractors Watpac Ltd for the design and construction of the onshore infrastructure for the LNG import facility planned for the Australian port of Newcastle in the state of New South Wales.

A South Korea-based liquefied natural gas project company has signed a development agreement with the Australian port of Newcastle, north of Sydney, to commence preliminary works on a proposed LNG import terminal using a floating storage and regasification unit.