June 4, 2018 / 4:18 AM / 4 months ago

Japan consortium picks Port Kembla as site for Australia LNG import terminal

MELBOURNE (Reuters) - A consortium including Japan’s JERA Co and Marubeni Corp aiming to ship liquefied natural gas (LNG) to Australia’s east coast has chosen a site south of Sydney at Port Kembla for an import terminal, it said on Monday.

The project will allow access to a new gas supply for local industries in New South Wales state by 2020, the consortium, Australian Industrial Energy (AIE), said in a statement.

AIE also includes iron ore magnate Andrew Forrest’s Squadron Energy. Top global LNG buyer JERA is a joint venture of Tokyo Electric Power Co and Chubu Electric Power Co.

This is Australia’s second proposed LNG import terminal. The nation, despite being the No.2 LNG exporter, is grappling with a domestic supply gap, partly due to restrictions on exploration and production, and partly to producers selling gas to Japan, China and South Korea in long-term contracts.

Shipping LNG within Australia or importing from elsewhere is viable at the moment because LNG is cheap, but prices are expected to rise in the early 2020s.

The Port Kembla terminal would have the capacity to supply more than 100 petajoules per year, sufficient to meet more than 70 percent of New South Wales’ total gas requirements.

Building the terminal is likely to require a capital investment between A$200 million and A$300 million ($152 million and $228 million), AIE said.

Australia’s biggest power generator, AGL Energy, is also considering building an LNG import terminal off the neighbouring state of Victoria for taking up to 2.5 million tonnes a year, but that would be mostly for its own needs, to supply its gas-fired power stations and households.

Reporting by Melanie Burton; Editing by Tom Hogue

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