AG&P LNG, a Dubai-based subsidiary of U.S-based Nebula Energy LLC is understood to be developing a deal that, assuming it flies, could save Australia's eastern seaboard from a pending gas shortage next year.
Mid 2024, the Australian Competition and Consumer Commission (ACCC) estimated that the southern states [NSW, South Australia, Tasmania and Victoria] faced the real prospect of shortages of locally produced gas from 2026.
The size of the shortfall, the ACCC added, depends on how much the Eraring coal-fired power station extension (by two years) would curbed demand for gas-powered generation. To the uninitiated, Eraring is a black coal-fired power station located in NSW on the shores of Lake Macquarie.
The ACCC expects a surplus of between 69-110PJ in the east coast market - around 20% of demand, in 2025 - depending on whether the LNG producers export all their uncontracted gas. However, in 2026, the ACCC’s projected surplus decline is between 54 and 98 PJ, subject to the level of forecast spot or additional LNG sales.
Enter AG&P LNG with a possible solution, which may save Australia’s largest energy companies from having to rely on the spot market, as one of a number of more onerous solutions.
One temporary solution being flagged by AG&P LNG - which is about to commence Australian developer work on an LNG import facility in Adelaide - involves a creative approach the South Australian government.
What the Dubai-based company is proposing is an arrangement whereby it continues work on the import terminal while simultaneously developing an interim measure to contract LNG cargo to be transported to Australia.
Once in Australia, it would then be distributed to users via what are referred to as LNG iso tanks.
Since acquiring Venice Energy and commencing early-stage work on a LNG import facility at Adelaide’s Outer Harbor, the project has struggled to get customers to commit to using the facility until beyond 2027.
Ironically, that’s despite the ACCC's and the Australian Energy Market Operator's (AEMO) predictions of gas supply shortfalls from 2026.
Given that offtake agreements would likely be a much smaller obstacle, AG&P’s proposal would allow it quickly boost supplies. It's understood the LNG developer is seeking to make a final investment decision on the interim measure very soon.