Only One Oz LNG Import Project Needed Until 2030s: WoodMac

There is only one LNG import terminal needed in Australia until the 2030s, despite at least four being proposed, and the region runs the risk of overbuilding capacity, energy consultancy Wood Mackenzie’s director for gas and LNG in the Asia-Pacific Nicholas Browne said July 16.

“We forecast only one LNG import terminal is needed given market fundamentals until the 2030s. As such, the project to get the greenlight first will hinder economic viability of subsequent projects. But, after overbuilding east coast LNG export capacity, we cannot rule out overbuilding of LNG import capacity as well, despite the overall inefficiency of the outcome as players price control and flexibility over collaboration,” he said.

There are currently no less than four separate LNG import projects proposed to be built in Australia -- which is expected to overpass Qatar next year as the world’s largest exporter of the fuel.

AGL, ExxonMobil, Mitsubishi and Squadron Energy all have proposals on the table.

“We see AGL’s terminal as the frontrunner as its residential and power generation based gas demand is already all locked in internally,” Maxwell said.

“The other projects still need to firm that demand up. But it is also worth watching gas producer strategy. Gas producers who want to capture the margins in trading could provide a solution for the other import terminals, underpinning their development,” he added, saying that ExxonMobil may have the strongest case for taking import capacity in the southern states.

“As one of east Australia’s largest gas producers, ExxonMobil could pursue LNG imports as a defensive move, allowing them to retain its supply flexibility for customers and protect its market share,” he said.

A combination of volatile gas demand, declining mature gas fields and ramp-up in LNG exports have strained Australia’s east coast market.

“LNG is now both the partial cause and the potential solution to these impending gas shortages. But LNG will change everything about the east Australian gas market particularly gas prices and there will be winners and losers,” Browne said.

“A new and uncertain market reality awaits gas consumers and producers in east Australia,” he added.