Australian gas firms move to avoid LNG export curbs
Two Australian east coast gas firms with LNG export connections have announced domestic projects, as the industry seeks to avoid major government intervention in LNG exports to secure local gas supplies.
Gas consumers have demanded that more be done to ensure that gas producers supply domestic markets before exports, ahead of an Australian federal and state energy ministers’ meeting on 12 August. The gas industry has responded by announcing domestic gas initiatives that will bring additional supply into the east coast market, without the need for Canberra to invoke the Australian domestic gas security mechanism (ADGSM) that diverts gas from LNG exports to domestic use.
Federal and state governments are under pressure to secure gas supplies without causing major damage to Australia’s international trading partners, by withdrawing gas for export LNG at a time when the global energy market is in a flux as a result of Russia’s invasion of Ukraine. Australian developers are taking advantage of this political conundrum to push for project approvals to be granted as quickly as possible, while also seeking to dissuade Canberra from mandating domestic gas supply.
But no matter how fast the approvals, these domestic supply projects will not come online quickly enough to meet any of the shortfall of 56PJ that the Australian Competition and Consumer Commission (ACCC) has forecast for the east coast in 2023.
Gas producer Senex, which was acquired by South Korean firm Posco and Australian private firm Hancock, has announced that it will invest A$1bn ($707mn) to increase gas production at its Atlas and Roma North fields in Queensland by 60PJ/yr from 2024.
“With the necessary regulatory approvals in place, Senex can unlock more gas which Australians need,” Senex chief executive officer Ian Davies said.
Australian producer Santos is also hoping for quick approval to join its newly acquired Hunter Gas Pipeline to its controversial 80TJ/d Narrabri gas project in New South Wales, providing the company a pathway to the domestic market. Santos pointed out as it announced its acquisition of the pipeline, which owns the underground route from Wallumbilla in Queensland to Newcastle in New South Wales, that it is an important step for the Narrabri project should all outstanding approvals come through.
“Once fully operational, Narrabri has the potential to deliver more than half of New South Wales’ gas demand, creating a more secure, local and affordable supply for businesses, manufacturers and families,” Santos’ midstream and clean fuels president Brett Woods said.
Both Santos and Senex supply gas to the 7.8mn t/yr Gladstone LNG (GLNG) export facility in Queensland. Santos owns 30pc of GLNG and is the operator. Both have an interest in minimising Canberra’s intervention in the east coast gas market and its ability to supply the LNG export industry, while pushing for quick approvals for domestically-focused projects.