MELBOURNE, March 29 (Reuters) – Plans by billionaire Andrew Forrest to have a liquefied natural gas (LNG) terminal ready by 2022 means Australia won’t suffer a supply shortfall until 2026, two years later than previously forecast, the energy market operator said on Monday.
“This development comes at a critical time, as existing Victorian production is declining faster than previously projected,” Nicola Falcon, group manager of the Australian Energy Market Operator said in a statement accompanying the AEMO’s closely watched outlook.
Producers’ forecasts for maximum daily capacity from existing, committed and anticipated southern fields in 2023 are nearly 20% lower now than they were a year ago, AEMO said.
Gas fields in the Gippsland Basin, which largely supplies the southern states are becoming exhausted, and losing flexibility to ramp up output during peak winter demand.
LNG imports and gas storage will be needed to cover peak demand.
Forrest’s privately owned Squadron Energy won state approval to build an LNG import terminal at Port Kembla in New South Wales, aiming to be ready by late 2022.
AEMO’s forecast did not include a controversial LNG import terminal proposed by AGL Energy, which is awaiting approval from the Victorian government. A decision is due shortly. If approved, AGL expects to start importing by mid-2023.
AEMO highlighted growing uncertainty in its demand forecasts as manufacturers switch away from carbon-based fuels to renewable power and hydrogen.
AEMO forecast industrial demand for gas would not grow in the next 20 years.
“Surveyed industrial users indicated their demand is unlikely to increase, even if prices fall,” the report said.