October 27, 2023 [Bnn]- In the heart of Port Adelaide, a new pulse of energy is set to reignite Australia’s gas industry. Origin Energy, a leading Australian power producer, is in advanced discussions with Venice Energy to import liquefied natural gas (LNG) from the proposed Outer Harbor LNG import terminal.
A deal that, if finalized, would reportedly make Origin the exclusive user of the terminal for a minimum of ten years.
A Solution for Australia’s Gas Shortage
The Outer Harbor project is a beacon of hope for tackling the gas shortages troubling southeast Australia. The project, slated to churn out an impressive 110 petajoules of LNG annually starting from mid-2026, promises to replenish local and interstate gas networks. The potential agreement between Origin Energy and Venice Energy may not only significantly propel Venice Energy’s project forward but could also tilt the scales of competition in the region, notably impacting Squadron Energy’s Port Kembla facility.
Competition and Criticism
The Port Kembla facility, spearheaded by Andrew Forrest’s Squadron Energy, was initially anticipated to receive its maiden gas shipment by the end of 2023. However, securing third-party customers has proven to be a challenge. Should Origin become the sole user of the Outer Harbor terminal, it could potentially constrict demand for other import terminals, adding further pressure to the already beleaguered Port Kembla project.
The decision to import LNG has sparked a contentious debate within Australia, the world’s largest exporter of LNG. Critics argue that the nation should not need to import gas to meet domestic demand. Advocates, however, contend that imports are a pragmatic solution given the challenges associated with developing new gas fields.
A Future Strategy for Origin Energy
The potential agreement with Venice Energy comes at a critical juncture for Origin Energy. The company is currently the subject of a $9.67 billion takeover bid from a consortium led by Brookfield. Should the deal proceed, Origin would transition into a privately-owned entity. The import of LNG through the Outer Harbor terminal could play an instrumental role in shaping Origin’s future strategy and operations.
While discussions between Origin Energy and Venice Energy have reached a structural framework agreement, a binding deal is yet to be signed. Origin Energy, committed to meeting its customers’ gas supply needs, is evaluating a range of different supply options, with the potential agreement with Venice Energy being one of them.
Overall, the development underscores a growing trend of LNG imports in Australia, highlighting their role in addressing domestic gas shortages and securing a stable gas supply. The potential agreement could have far-reaching implications for other LNG import projects in the region and may play a key role in shaping the future of Origin Energy.
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