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AIE announces long term lease for Australian gas terminal

Published by , Editorial Assistant
Tanks and Terminals,

Australian Industrial Energy Pty Ltd (AIE) has signed a lease for up to 25 years with NSW Ports for the Port Kembla gas terminal (PKGT) in a step towards securing gas supply certainty for New South Wales, Australia, as well as providing local employment opportunities and economic benefits for the Illawarra region.

AIE, part of Squadron Energy Group, is also pursuing the associated development of a dual fuel LNG-Hydrogen 800 MW power station in the Illawarra region to be initially fuelled by gas from the PKGT. The design provides for large scale dispatchable power and the ability to transition to hydrogen fuel as Fortescue Metals Group and other hydrogen suppliers bring industry scale production online.

With a forecast capital cost of US$250 million, construction of the Australian gas terminal could see subcontracts worth around US$76 million awarded to local businesses in the Illawarra.

The PKGT will create around 130 – 150 jobs during construction and between 40 – 50 ongoing roles during operation, as well as contributing to the diversification and growth of Port Kembla and the Illawarra region. The lease agreement includes a 10-year initial term with options to extend up to a maximum 25-year term.

AIE will start the site handover process immediately, paving the way for the new gas terminal construction works to commence. Construction of the PKGT is forecast to take only 18 – 20 months, putting the project on track to supply more than 75% of New South Wales’ gas needs by the end of 2022.

This cements the PKGT as the only project in the eastern states with a potential timeframe to assist the New South Wales State Government to meet the terms of its recent memorandum of understanding (MOU) with the Commonwealth to inject an additional 70 PJ of gas into the east coast market to meet predicted shortfalls.

Stuart Johnston, CEO of Squadron Energy, said that the agreement with NSW Ports further clears the way for agreements between AIE and future gas supply customers to be completed in the coming months: “We have long recognised Port Kembla as the best site for this critical gas project and with the lease for the terminal now agreed, commercial arrangements around future supply contracts can be accelerated with confidence.”

Chairman of AIE, Michael Masterman, said that the PKGT demonstrates the important role of natural gas as a transition fuel toward a low carbon future: “Our commitment to delivering Australia’s first gas terminal is about reinforcing grid reliability today and investing in carbon-free technologies that support a more rapid decarbonisation of the economy.”

The PKGT is strategically located in an existing industrial port with experience in hydrocarbons. The terminal will be located a short distance (6 km) from the existing Eastern Gas Pipeline (EGP) which provides a major natural gas arterial between Victoria and New South Wales.

AIE acknowledge the strict requirements of the Development Consent granted by the New South Wales State Government, including the environmental guidelines around the marine environment, and are committed to meeting these over the lifetime of the project.

CEO of NSW Ports, Marika Calfas, welcomed AIE’s long-term commitment to Port Kembla: “The gas terminal brings a new trade to Port Kembla and provides significant opportunity for the region. It will also address future energy needs in NSW [New South Wales] and other states. We commend AIE and Squadron Energy’s commitment to using local businesses to create value and jobs throughout the Illawarra region."

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