Australia set to import gas for first time amid looming supply crisis
Australia's first gas import terminal to come online amid looming shortfalls.
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00:00The facility is sort of alongside other big industry at Port Kembler.
00:06You've got the coal stockpiles on one side and the Blue Scope steel manufacturer just
00:12across the inner harbour.
00:13So what Squadron has done is basically dredge the inner harbour of Port Kembler to make
00:18enough space for this giant floating storage and regasification ship that, if all goes
00:24to plan, will be sailing through the Port Kembler heads in about two years' time, ready
00:29for winter 2026.
00:31And what this floating facility will do is receive LNG from LNG tankers and then store
00:38that gas on the ship and regasify it.
00:40So that means turning the liquefied natural gas into the kind of natural gas that is then
00:45piped into the east coast grid.
00:48Now the physical infrastructure in Port Kembler is pretty much complete.
00:52The company now just needs to do the crucial paperwork, I guess homework, of actually securing
00:58its gas suppliers and also securing the contracts with the companies that will supply the gas
01:05too.
01:06So it is a bit of a paradox for a country like Australia, which has huge gas reserves
01:11and is a huge LNG exporter.
01:15But the fact is, according to Squadron Energy, the east coast is running short of gas.
01:20And I spoke to the chief executive, Rob Wheels, who said the forecasts are for Australia to
01:26run short of gas in years to come.
01:28But even just this winter gone, we came very, very close.
01:31Here's what he had to say.
01:33The short answer is very, very close.
01:36And the gas storage facilities that are available currently were drawn down significantly.
01:41And that supply crisis led to high gas prices, which flowed into our energy electricity market
01:46as well with high electricity prices that could all have been averted had this LNG import
01:52terminal facility been available at that time.
01:55So Jane, just what is the official outlook for gas supplies?
01:59Yeah, well, Squadron reckons the outlook is pretty dire.
02:02And that's why it wants to sort of step in here.
02:04But the official outlook isn't particularly rosy.
02:07The Australian Energy Market Operator has forecast that within just a few short years,
02:12demand is likely to outstrip supply, particularly in the southeastern states of Australia.
02:18That's because of a few reasons.
02:19Firstly, there is a pipeline from Queensland.
02:22And on peak days, like in winter, when everybody's using their heaters here in Canberra particularly,
02:27the pipeline's running already at max capacity.
02:30But the biggest reason we're running out is because the fields in the gas in the Bass
02:34Strait rather, which have been really the backbone of gas supplies for the southeastern
02:39states for decades, well, they're depleting much faster than expected.
02:43And new gas fields simply have not been developed.
02:47So that's kind of how Australia has got itself into this mess where we're a huge exporter
02:52now looking to import gas to fill a domestic supply shortfall.
02:57Now, gas is really important for heavy industry and manufacturing.
03:01And as the government has said, it's going to be crucial to keeping the lights on as
03:05the country transitions to renewable energy.
03:08If those gas supplies run out, well, backers say Australians are going to be facing higher
03:13energy prices and could ultimately be crippling for manufacturing and heavy industry.
03:19So here is Rick Wilkinson.
03:20He is an energy market analyst.
03:23And I asked him, you know, how has it got to this point?
03:26Quite simply, we've run out of time.
03:29This is the only option, LNG reclassification, that will bring on significant volumes in
03:34the next two years.
03:36All the other options, be they expansion of pipelines, increased storage, or explore for
03:41and develop, take three to four years or even longer before you've reached certainty.
03:47That's Rick Wilson, an energy market analyst there, Dan, saying we've simply run out of
03:51time for any other option to plug this short-term gas shortfall.