The Australian Oil & Gas Review
CENTRE STAGE
Growing liquefied natural gas (LNG) exports out of QLD has put the Port of Gladstone in the spotlight as domestic gas security issues weigh on the industry, and energy prices on the east coast continue to climb.
2017 was a record trade year for the Port of Gladstone, which has cemented itself as QLD’S largest trading port.
Its commodity base is varied, but it is the port’s increasing LNG exports that are in the spotlight as domestic gas shortages pose a threat to east coast markets.
There are a number of factors contributing to the predicted domestic shortfall, but the heat was on Gladstone’s $70 billion LNG precinct as a primary cause.
In 2017, the port exported 20.2 million tonnes (mt) of LNG, with all three projects (APLNG, GLNG, and QLNG) continuing to ramp up to nameplate capacities, which would see up to 24mtpa of LNG shipped from Curtis island once fully developed.
But exporting high volumes of LNG was what the precinct was always intended to do, Gladstone Ports Corporation chief executive Peter O’sullivan said.
“It was a little surprising that Gladstone was at the centre of the debate,” Mr O’sullivan told The Australian Energy Review.
“When these plants [APLNG, GLNG and QLNG] were constructed, the planning was always that they would be major export terminals and they accessed new fields.”
In fact, it is these projects, along with the mega projects off the WA coast, that have helped Australia (almost) overtake Qatar as the world’s largest exporter of LNG.
Earning this title, however, does not solve the issue facing Australia’s domestic market.
In July 2017, following a series of inquests, the Turnbull Government went into damage control and introduced an Australian Domestic Gas Security Mechanism (ADGSM) which would give the Government power to divert uncontracted LNG exports to the local market if it determined there would be a shortfall.
After meeting with the east coast LNG exporters, in November the Government decided it would not trigger export controls, and instead rely on a ‘handshake’ agreement for producers to make more gas available to domestic customers at competitive market terms.
Santos, for example, made a chain of announcements in the last half of 2017 that it would deliver additional gas into the domestic market, with contributions of more than 60 petajoules (PJ) over the next two years.
“Santos and our GLNG partners are delivering on our public commitment earlier this year to meet domestic gas demand while also honouring our long-term LNG contract obligations,” Santos managing director and chief executive Kevin Gallagher said in December.
“This additional supply from GLNG is enough to also cover half of any shortfall that might arise under the ACCC’S high demand case for 2018.”
The Government still reserved the right to trigger exports next year if it saw fit.
Mr O’ sullivan said from aim as goev:e tree si lagn risk perspective, if the Government did pull the trigger existing contracts at the port would be protected and maintained.
“From a security of contract perspective we imagine that the existing contracts and existing export capacity would be protected going forward,” Mr O’sullivan said.
“Areas of any energy security and potential moratoriums on gas are probably more worrying in terms of whether they will stop future development and decrease the chance of future growth.”