Australian industry has backed AGL’s $300 million plan to import Liquid Natural Gas (LNG) into NSW & Victoria from Western Australia, according to The Australian Financial Review.
The plan comes as manufacturers and industry have complained about increasing gas prices and concerns that too much of Australia’s local supply of gas is being exported.
The plan will most likely involve a floating gas terminal off the coast of Western Australia to extract gas. The first option for the terminal would convert liquid gas into gas on-board. The other option would convert it onshore.
AGL chief executive Andy Vesey said that the plan would be viable under “a broad range of pricing scenarios” even though a WA gas site is still to be selected.
“Without any further exploration and development across eastern Australia, additional sources of supply into the domestic market will be required to maintain price stability and security of supply into the future,” Mr Vesey said.
“AGL’s strategy to stimulate wholesale gas market competition requires scenario planning for an uncertain future – LNG imports forms an important new initiative.”
AGL is investing more than $17 million in the project and feasibility studies are underway to pick a site and judge the costs.
Some commentators said the possibility of intra-state importing of gas shows the failure of the east coast market to fix the difference in demand and supply.
However, Mr Vesey disagreed with these concerns, saying that it was “natural progression” for developing gas markets to outgrow local supplies.
The potential import project sits among several other strategies AGL has to ensure it has enough gas for its customers, including an agreement to buy gas from Cooper Energy’s new Sole gas project in Victoria and access to gas storage at plants at Iona in Victoria.