It’s mad, via the AFR:
Jee Yoon, founder and managing director of South Korea’s Energy Projects and Infrastructure Korea (EPIK), said he was fielding interest from LNG traders keen to use the Newcastle GasDock and was still targeting a final investment decision on the $US430 million ($620 million) project in early 2020.
…Unlike the Port Kembla project owned by Australian Industrial Energy, the Newcastle GasDock project is being developed as an infrastructure project that would be used by third parties who would be responsible for sourcing LNG and selling it into the domestic market. The structure means that signing up customers that would use the terminal is critical to underpin the investment.
…Commodity trading powerhouses such as Trafigura and Gunvor are growing their presence in LNG, while “portfolio” players such as Shell and Total actively trade rather than just sell their own LNG to end-users. Saudi Arabia’s Aramco is also making big strides into LNG, last week signing a large purchase deal in the US and recently setting up an LNG trading desk in Singapore, according to consultancy FGE.
Presumably Mr Yoon’s business model is toll the volumes passing through his regasification terminal. If we’re stupid enough to let it go ahead then it’s not a bad idea for him.
Except, of course, if you are going to let one single gas trader take all of the gas. That then adds another middle man clipping the ticket on the Australian gas molecule round trip circus:
- mined in QLD, SA or VIC for $1Gj
- piped to QLD and frozen for $7Gj
- shipped out to the Coral Sea;
- u-turns and sails instead to Newcastle;
- regasified and piped to QLD, NSW, SA or VIC for $2Gj.
Viola! $1Gj gas is presented for use to Aussie households and business for $10Gj.
Unless, of course, it is all bought by the very same cartel that owns steps 1-4, Shell or Total, for instance. Then the same gas might just do the entire round trip again and $1Gj becomes $20Gj, $30Gj, $40Gj and on it goes until the sad little gas molecule evaporates through the lonely, dark aperture of some leaking pipe or holed LNG shipping bladder, never to be used but most certainly mercilessly abused.
It’s the kind of rehypothecation that a bankster could only dream of.