Australian state balks at energy company’s request for help with LNG terminal

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The model of an LNG carrier is seen in this illustration taken May 19, 2022. REUTERS/Dado Ruvic/Illustration/File Photo

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MELBOURNE, Aug 11 (Reuters) – Australia’s New South Wales state threw cold water on Thursday on a proposal for government aid to secure gas imports through an import terminal currently under construction. construction by the richest man in the country to avoid a projected deficit in 2023.

Australia’s competition watchdog warned last week that southern states would face a gas supply crisis in 2023, and Energy Minister Chris Bowen and his counterparts in the State are expected to discuss the issue at a meeting Friday. Read more

Ahead of the meeting, mining billionaire Andrew Forrest’s Squadron Energy discussed with energy ministers this week a bid to fast-track development of the liquefied natural gas (LNG) import terminal it is developing build in New South Wales, the Australian Financial Review reported this week.

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A squadron spokesperson confirmed the report, which also said the terminal could be ready by mid-2023 if an entity, such as the Australian Energy Market Operator (AEMO), agrees to to use the terminal to secure the gas supply.

Squadron chief executive Eva Hanly had discussed with governments a proposal for an independent body to use the company’s terminal to secure market relief gas supplies and hoped ministers would make decisions on that at Friday’s meeting, according to the report.

The AEMO has previously said Squadron’s Port Kembla LNG import terminal would be key to bolstering gas supplies in Australia’s most populous state, but Squadron has so far failed. recruit enough customers to complete the project. Read more

The company tried to line up the country’s major energy retailers, including Origin Energy (ORG.AX), to use the Port Kembla terminal to import gas, but only No. 3 retailer EnergyAustralia signed up so far.

In response to Squadron’s proposal, however, the NSW government said the company should be able to find customers for its LNG project in the market, not rely on help from the government.

“Given the strong interest of commercial and industrial customers in a stable and affordable gas supply, it would appear that there are significant market opportunities for Squadron Energy to meet its minimum supply commitments in order to proceed with its Port project. Kembla,” a New South Wales spokesperson said. The Ministry of Planning and Environment said in an email response to a query from Reuters.

Squadron did not immediately respond to a request for comment.

Origin said it had not signed up to use the LNG terminal because it could source cheaper gas elsewhere.

“The reason we have not reached a deal to date is that there are cheaper sources of domestic gas supply and these offer the best chance of keeping gas prices lower for our customers,” an Origin spokesperson said.

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Reporting by Sonali Paul; Editing by Susan Fenton and Sam Holmes

Our standards: The Thomson Reuters Trust Principles.

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