Vopak Eyes 2026 for First Imports into Avalon Gas Terminal
05.24.2023 By TankTerminals.com News - NEWS

May 24, 2023 [Financial Review]- The Dutch terminals and tanks giant developing an LNG import terminal in Victoria says it is hopeful it can bring in gas from 2026 as it seeks to capitalise on tight East Coast markets and elevated pricing.

 

Victoria has set a target of having renewable energy provide 95 per cent of its needs by 2035 but faces an expected gas shortfall as soon as 2026, alarming manufacturers and threatening to underpin a surge in costs.

Several new gas projects have stalled after the federal government’s capped prices, creating an opening for LNG import terminals.

Vopak last year sought environmental referral from the Victorian planning minister, and the company is hopeful it will soon get the green light to proceed as it pitches the project as a gateway to the state’s ambitious renewable energy plan.

“We have put this project in place, deliberately so, to be a bridge to the renewable energy outcome,” said Gary Constantine, Vopak’s project director. “We don’t need to be there for 20 years. We are trying to do a footprint that has a small footprint and can be removed quite easily. We will be able to bridge that gap between supply and demand.”

 

The project will use a floating ship – known as a Floating Storage Regasification Unit – moored at an existing anchorage point in Port Phillip Bay, 19 kilometres off Avalon. Vopak said the location would minimise the visual impact on residents and communities.

 

The FSRU will receive LNG from tankers, regasify it and supply the gas directly into the Victorian Transmission System via a pipeline underneath Port Phillip Bay, and through farmland managed by Melbourne Water.

To proceed, however, Vopak will need to overcome state government scepticism towards the industry. Victoria in 2021 vetoed a plan by AGL Energy to build a LNG import terminal, concluding that chlorinated, chilled seawater discharged by the FSRU could harm sea life and hurt tourism.

Mr Constantine said Vopak is studying how it could use renewable energy to power the vessel, which he said would also be used to negate any water emissions.

Victoria has a low threshold to any environmental risks, and Planning Minister Sonya Kilkenny this year asked Viva Energy to provide more detail on the project’s environmental impact, a request that threatens to delay the proposed LNG import terminal in Geelong.

Viva had previously intended to make a final investment decision on the LNG project last year with an aim to start imports by winter of 2024.

The delay comes despite the impending gas shortfall. The Australian Competition and Consumer Commission this year said the shortfall would intensify from 2026, as less gas was delivered into the domestic market while growing amounts of shipments flowed offshore.

A structural shortfall would likely force the government to direct more shipments to stay domestically, stoking anger from allies and the gas industry, which has born the brunt of recent intervention,

Labor this year legislated a 12-month cap on uncontracted gas at $12 a gigajoule, established a mandatory code of conduct to force gas to be sold at “a reasonable price”, and committed $1.5 billion to power bill discounts – a policy suite slammed by the fossil fuel industry as a drastic overreach.

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