Australian Industrial Energy (AIE), wholly owned by Australian Squadron Energy company, announced that it has signed a long-term lease agreement with New South Wales Ports for the site of the A$250 million ($180 million) Port Kembla Gas Terminal (PKGT) at Berth 101 in Port Kembla’s Inner Harbour.
AIE said that it had leased the site for 10 years initially, with an option to extend to 25 years. “AIE will immediately start a site handover process, paving the way for construction works to commence and putting the PKGT on track to supply more than 75% of NSW’s gas needs by the end of 2022.”
The agreement with NSW Ports further clears the way for agreements between AIE and future gas supply customers to be completed in the coming months, Squadron Energy CEO, Stuart Johnston said, adding that “we have long recognised Port Kembla as the best site for this critical gas project and with the lease for the terminal now agreed, commercial arrangements around future supply contracts can be accelerated with confidence.”
AIE is racing to get its 2 MMT/Y Port Kembla Gas Terminal open ahead of AGL-planned LNG import terminal in the state of Victoria, which is awaiting government approval. A decision is due by the end of this year. There are three other proposed LNG import terminals on the drawing board, too. However, analysts expect the market will only need one or two of the terminals.
Squadron has yet to line up gas buyers for the project but is in “advanced discussions” with potential buyers. It hopes that by locking in the site and beginning early work, that will give buyers more confidence to sign deals, Johnston said.
Last month, Marubeni and Jera sold their interests in the proposed LNG import project to Squadron Energy as the Australian energy firm has acquired Jera's 19.9% and Marubeni's 30.1% interest in the project’s operator (AIE) - understood to be struck at close to cost. "Although the Port Kembla project presented an exciting opportunity, we felt more time than was available was necessary for us to invest, and we remain open to future targeted involvement with AIE," Jera had said.

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Full information of the Port Kembla Gas Terminal project is available at the Global LNG Database®

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Backgrounds:

On 11 Jun. 2020, Australian energy infrastructure company, Jemena announced that it has submitted plans to the New South Wales government to connect the proposed Port Kembla LNG import terminal to the Eastern Gas Pipeline (EGP).
The “company has also advanced plans to modify the EGP to allow surplus gas to flow to Victoria thereby avoiding gas shortfalls which are forecast from as early as 2022.” “Once the Port Kembla LNG import terminal project gives us the green light, we will be able to quickly mobilise to the field, and anticipate having the project completed in around 12 months.”
On 20 Apr. 2020, NSW government’s department of planning, industry and environment announced that it has approved Port Kembla LNG imports project’s plan to increase capacity at its terminal as the modification will allow it to increase gas supply during the cooler months when demand for gas from domestic users is high.
“The modification also includes an increase to the number of ships that can deliver LNG to the terminal which will allow for more flexibility in the delivery schedule. The department approved the modification application subject to strict conditions to manage and minimise impacts on the marine environment and the amenity of the local community.