Korea takes piss with fifth LNG importer for NSW

Can Australia’s gas catastrophe get any more stupid? Yes, it can:

Australia’s fifth LNG import terminal has been proposed by a South Korean developer, striking a preliminary deal with the Port of Newcastle to boost gas supplies to the nation’s east coast as part of a $US430 million ($586m) facility.

EPIK, described as a Seoul-based LNG project development company, says the Newcastle LNG facility covers an option agreement to start initial works on a floating storage and regasification unit followed by other projects including a gas-fired power plant and an LNG bunkering facility.

“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 LNG via a new, low cost FSRU 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.

Korea’s KOGAS owns equity stakes in Gorgon, Wheatstone and GLNG. The last is the key. It is the most gas-short of the east coast gas cartel’s major operators.

KOGAS is a government owned resource entity with a global portfolio of assets. While one should not conflate that with a private LNG importer, it doesn’t make a whole lot of sense for any Korean entity to be importing gas into Australia when its government is busy exporting so much of it that we need imports in the first place.

More to the point, the arithmetic of LNG imports is disastrous. The current Asian gas price is at $11.50Gj after heavy oil price falls. If we import it, the local cost will include:

  • extraction;
  • piping;
  • liquifaction;
  • shipping;
  • gasification;
  • piping again.

The price will be around $14.50Gj and it will become the marginal price setter on the east coast.

That’s before we confront the awful fact that the gas will very likely come from QLD, be piped and frozen by GLNG, driven out to sea, regasifed in Newcastle and piped to Sydney. This is just handing a pack of rent-seekers control of your national security sensitive energy supply.

Just toughen the ADGSM domestic reservation policy on KOGAS with the flick of a pen instead.

Comments

  1. “That’s before we confront the awful fact that the gas will very likely come from QLD, be piped and frozen by GLNG, driven out to sea, regasifed in Newcastle and piped to Sydney. This is just handing a pack of rent-seekers control of your national security sensitive energy supply.” – If this happens in France..

    • Why can’t we just pipe it out to sea and back again? I’d suggest a loop of pipe that just extends past the 12mile territorial zone and then back into Australia, the gas doubling in price over its 24 mile trip. No need to liquefy it = bonus rent seeking profits.

      • Don’t worry, they’ll probably just run it through the existing pipeline, and charge like they sent it out to sea, for even more profits.

      • As the constitution forbids subsidy and taxation between states that might restrain free trade maybe they can put pneumatic pods in the pipe containing all sorts of QLD goodies and subsidise the crap out of them, then import them as international goods into nsw or vic underming local producers for some added kick! Cheap freight too – you might knockoff Auspost! If your going to destroy a local economy best to innovate and do it right!

  2. Free trade agreement anyone, if any of these are built and government changes the rules via reservation like WA will that invoke the ISDS clauses and require compensation of the foreign profit losses incurred and arbitrated by a foreign court ?

    The upside is it will drive renewables so perhaps it is a cunning LNP plan to decarbonise Australia (aahh no chance).

    • TailorTrashMEMBER

      “We welcome foreign investment …..it is good for jobs and growth “……..(insert Strayan politicans name here …….)
      ………do they have a pub test in Korea ?………they have to rolling around on the floor laughing at this ………

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