Europe’s race to exchange Russian fuel provide has threatened Australia’s plans for 5 fuel import terminals as they compete for key infrastructure, elevating the danger of a provide shortfall in Australia’s populous southeast within the subsequent two years.
France, Germany, and the Netherlands amongst others might want to import liquefied pure fuel (LNG) to exchange pipelined fuel from Russia, which has been hit by sanctions throughout the Ukraine battle.
European customers are grabbing floating storage and regasification models (FSRUs) wanted to transform LNG to fuel, leaving little left for Australian import tasks that purpose to fill an anticipated fuel provide hole from 2024.
“Europe is snapping up all of the spare LNG volumes on the market and any spare floating LNG regas capability. So there isn’t any spare regas capability left over for Australia,” stated Credit score Suisse analyst Saul Kavonic.
Though Australia is the world’s prime LNG exporter, its fundamental fuel fields are removed from Sydney and Melbourne, and different huge cities within the southeast, and the output is usually tied into contracts with Asian customers.
The nation is due to this fact continuing with LNG import tasks, however most haven’t but reached the stage of locking in clients or regasification infrastructure, and are getting pipped on FSRUs by European customers.
Australia’s Viva Vitality, which was concentrating on a closing go-ahead this yr for an LNG import terminal at Geelong close to Melbourne, misplaced its tentative reserving for an FSRU from Hoegh LNG to a German person, stated Woodside Vitality Group Ltd CEO Meg O’Neill.
Woodside, a prime Australian unbiased fuel producer, has a tentative settlement to provide LNG to Viva’s terminal.
Not sufficient FSRUs
“I believe one of many issues which might be going to be difficult is the supply of floating storage regas models, the FSRUs,” O’Neill instructed Reuters on the sidelines of the World Gasoline Convention in Daegu, South Korea, final week.
“So I am a bit nervous, really, that what’s occurred in Europe goes to delay these alternatives in Australia.”
Viva, which is awaiting environmental approval from the state of Victoria for its terminal, stated it’s nonetheless in talks with Hoegh.
Hoegh LNG didn’t touch upon Viva’s state of affairs however stated in emailed feedback its present fleet will likely be utilized in tasks the place the corporate has made “agency commitments”.
The corporate on Could 5 introduced two FSRU commitments to German utility RWE, whereas Greece-based Dynagas introduced two models for German utility Uniper.
All 5 of Australia’s proposed LNG import terminal homeowners – Viva, Squadron Vitality, Venice Vitality, Vopak and EPIK – instructed Reuters they have been continuing with work on their tasks, when requested about challenges in securing FSRUs.
Just one has begun development: Port Kembla Vitality Terminal being constructed by Squadron, which goals to be prepared for first fuel by the tip of 2023 with a Hoegh Galleon FSRU chartered for the positioning.
“The infrastructure will likely be in place. Nonetheless, when first fuel flows is very dependent upon buyer necessities,” Squadron’s performing CEO, Michael Shaw, stated in emailed feedback.
Venice Vitality’s Outer Harbor LNG Undertaking in South Australia is working with Greek LNG service firm GasLog on plans for an FSRU, which could contain changing an LNG service.
Venice hopes to have an FSRU in place by the second quarter of 2024, however that can rely upon shipyard availability, Chairman Kym Winter-Dewhirst stated.
“What we’re seeing is the strain on the shipyards for conversions: That is the place we’re seeing essentially the most strain,” he instructed Reuters.
Searching for a new-build FSRU somewhat than chartering an present vessel, nevertheless, would convey lengthy delays.
“For those who ordered an FSRU right now, it’s possible you’ll get one delivered in 2026 on the earliest,” Hoegh LNG instructed Reuters in its emailed remark.
Australia’s competitors regulator warned in March that with out LNG imports, the southeast market would face a shortfall from the winter of 2024.
“Extra regarding nonetheless is that by 2026 or 2027, we count on a shortfall over the entire east coast,” Australian Competitors and Shopper Fee Commissioner Anna Brakey instructed a convention in March.
(Reporting by Sonali Paul in Melbourne and Florence Tan in Daegu, South Korea; Modifying by Edmund Klamann)