Rinehart-backed joint venture pledges $1bn gas expansion but hurdles remain
Gas producer Senex, which is jointly owned by South Korea’s steel giant Posco and Australian billionaire Gina Rinehart, has planned a more than $1bn expansion to its Queensland gasfields with the bulk of the extra fuel apparently to be earmarked for domestic use.
The company, which is seeking federal and state approval for two sites adjacent to its Atlas and Roma North projects in the Surat Basin, made the announcement ahead of a speech by the resources minister, Madeleine King. It still has to clear some state regulatory hurdles, Senex said.
If it proceeds, the investment would triple Senex’s annual output of about 20PJ of gas in 2021 to 60PJ, a spokesperson said. Senex’s current output is split roughly evenly between export and domestic, but “the vast majority of the additional production will be diverted” to local customers, they said.
The company, which was taken over last December and delisted from the ASX in April, said the recent energy crisis in eastern Australia highlighted the need for more supply.
“The recent electricity crisis proved natural gas is critical to providing secure and reliable energy for Australians and is needed to underpin renewables and replace ageing coal generation,” Senex’s chief executive, Ian Davies, said. Without extra gas “electricity costs will further rise”, he said.
Two-thirds of the planned investment would be spent in the next two years, creating more than 200 jobs during construction and another 50 permanent roles, the company said.
“We look forward to continuing to work collaboratively with the Australian and Queensland governments to finalise the necessary regulatory approvals for this investment, and supplying more gas to market as soon as possible,” Davies said.
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The announcement follows a report released by the Australian Competition and Consumer Commission last week that warned of a potential shortfall of 56PJ of gas next year unless LNG exports spare some of the uncontracted gas for local use. Gas availability and soaring energy prices will be a subject of Friday’s gathering of energy ministers in Canberra.
The Australian Petroleum Production and Exploration Association (Appea), the gas industry’s peak body, welcomed Senex’s investment. “This is a massive investment to help secure Australia’s energy future and ensure local natural gas keeps flowing to manufacturers, homes and businesses,” the acting Appea chief executive, Damian Dwyer, said.
Senex said it had signed long-term agreements for 90PJ, including 43PJ in the past 12 months. Local customers include Visy, CSR, Orora, Adbri, Southern Oil Refining and CleanCo, and it supplies gas to GLNG for export. Resources minister King said “more supply from more sources and more proponents, more vendors … is definitely part of the solution”.
“Making more gas available to more people is important to end that ongoing shortage that has been predicted,” she said. “So, I’m fully supportive of Senex’s announcement today.”King said she had “every confidence” that the company would follow the rules required for it to win approval from environment minister Tanya Plibersek. The previous owner of the two expansion sites, APLNG, had secured the environmental approvals for the area, and Senex is seeking to have the approval extended to them, the company said.
The expansion plan will also need to gain approval from Queensland’s Department of Environment and meet the conditions set out under the Science and the Regional Planning Interests Act.
“Queensland continues to do the heavy lifting on domestic gas to ensure energy security,” resources minister Scott Stewart said. “Any resources projects must stack up environmentally, socially and financially.”
Dorinda Cox, Greens spokesperson for mining and resources, saidthe government was heading the wrong way by creating a vision for Australia’s future resources industry that was backed in by coal and gas.
“It should be focused on investing in green resources and creating a clean energy export industry, including renewables-generated fuels such as green hydrogen,” Cox said.