South Korean floating storage and regasification unit development company EPIK Co. Ltd. and the Port of Newcastle have signed an option agreement to commence preliminary works on a $500 million gas import terminal.
The project, named Newcastle LNG, will be built within the Port of Newcastle, and would serve the NSW gas market where natural gas prices remain higher than Asian liquefied natural gas prices.
Situated at the back-end of the existing gas transmission network, Port of Newcastle is one of Australia’s largest ports and a major trade and logistics hub, making it an optimal area to develop a liquefied natural gas import terminal.
“Based on our assessment of the NSW gas market, particularly along coastal demand regions such as Newcastle and Sydney, we are confident that by importing liquefied natural gas via a new, low cost floating storage and regasification unit terminal, we will be able to provide an infrastructure solution that is capable of delivering a cost-efficient source of alternative gas supplies to the region on a long-term basis,” EPIK founder and managing director Jee Yoon said.
“We are very excited to be working with Port of Newcastle and hope to expand our relationship by discussing other potential projects, such as a gas-fired power plant and an liquefied natural gas bunkering facility.”
Port of Newcastle’s executive manager customer and strategic development, Ian Doherty, said the deepwater port was uniquely placed on Australia’s east coast due to its significant land and channel capacity, making it an attractive location for the Newcastle liquefied natural gas project.
“This type of development opportunity is consistent with our diversification plans and we’re pleased to be supporting EPIK as it conducts preliminary investigation work, especially given its potential benefits for the NSW economy,” Mr Doherty said.
The potential investment for the Newcastle LNG project is estimated to be between $US400 million ($A547 million) $US430 million, which will include a 170,000 cubic metre class new-build floating storage and regasification unit and associated on-shore infrastructure.
EPIK expects to place an order for the floating storage and regasification unit new-build with a shipyard subject to receiving state government regulatory approvals for the project.
The project will face some stiff competition for local customers with several other import terminals all targeting local businesses that have struggled to get gas supply as local producers targeted offshore export markets.