The company behind one of the region's largest energy infrastructure projects - the proposed $589 million Newcastle Gas Dock - says unfavourable changes in economics of the gas industry has forced it to weigh up the project's commercial viability.
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South Korean liquid natural gas development company EPIK Co. Ltd. launched the project at the Port of Newcastle in 2018, with the intention of supplying the NSW gas market.
The project received state significant development status in August 2019 and was expected to proceed quickly.
However, EPIK managing director Jee Yoon said this week that it was still seeking to secure a commercial partner for the project.
He also acknowledged the economics of importing gas had become "a lot more difficult" in recent years.
"The east coast gas market has been in a bit of a conundrum for some time," he said.
"With the Australian Competition and Consumer Commission report coming out it remains to be seen whether we are going to focused on domestic production or whether LNG imports are the way to go. In regard to LNG imports it seems to be a lot more difficult from an economic point of view today than it was a few years back."
"That commercial partner, whoever that is, needs to make those commercial decisions. All I can say is that given the current environment it's not an easy decision for them."
It warns substantial volumes are required for the domestic market next year to avoid a shortfall. It has recommended the government consider intervening in the market, by pulling what's known as the "gas trigger" to ensure there is enough supply.
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The Newcastle project would also face competition from the Port Kembla Gas Terminal Project.
"The (Port Kembla Project) has the luxury of being able to start construction and move forward because it's a 'build it and use it model; we just don't have that luxury," Mr Yoon said.
"We like to take more a textbook style development approach and ensure that we have our commercial counterparties locked in prior to advancing the project further."
Mr Yoon said an investment decision would not be taken until EPIK had secured a commercial partner.
"We have been in discussions with multiple commercial partners for some time. We obviously have a preferred one. If they are ready to do it today we can move on it," he said.
EPIK said in 2018 that it was confident that by importing liquefied natural gas via a new, low cost floating storage and regasification unit terminal, it would be able to provide an infrastructure solution capable of delivering a cost-efficient source of alternative gas supplies to the region on a long-term basis.
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Matthew Kelly
Matthew Kelly has worked as a journalist for more than 25 years. He has been working as a general reporter at the Newcastle Herald since 2018. In recent years he has reported on subjects including environment, energy, water security, manufacturing and higher education. He has previously covered issues including the health and environmental impacts of uncovered coal wagons in the Hunter Valley, the pollution of legacy of former industrial sites and freedom of information issues.
Matthew Kelly has worked as a journalist for more than 25 years. He has been working as a general reporter at the Newcastle Herald since 2018. In recent years he has reported on subjects including environment, energy, water security, manufacturing and higher education. He has previously covered issues including the health and environmental impacts of uncovered coal wagons in the Hunter Valley, the pollution of legacy of former industrial sites and freedom of information issues.
