Saturday, February 22, 2020

World's sharpest, shrewdest oil, gas and coal traders counting on Australian governments to ban local production, enforce use of expensive & unreliable renewables, and force Australia to import, oil, gas and coal.

by Ganesh Sahathevan


Vitol, Glencore and Trafigura are among  the world's biggest privately owned oil, gas and coal trading companies. They have done with their own money what ExxonMobil, Shell ,Chevron and others have taken more than a century to accomplish, with money from stockmarket investors. These independents have grown very large and very influential in about half the time (and less).

About a decade ago ,when Australian governments decided that refining oil here was not good for the environment, the independents began buying up old refineries to turn into import terminals.




Geelong Refinery - Vitol
vitol.com





Trafigura bets $800m on Australia energy




Joining then is Australia's very own Twiggy Forrest ,in a JV with Japan's Marubeni (see story below).


These are billion dollar bets which are in some part financed by "shorting"ie shuttering or selling coal assets. Some have chosen to cap production ie conserve the resource for the future, while curtailing supply, which in turn drives up current prices.


They are also long term bets, so these players can wait for that day, in say 5-10 years, when Australia's energy needs will have to be met by largely imported oil, gas and coal due to government policies that will make local exploration and production a waste of time. The coming of that  is also likely to coincide with a growing reliance on renewables, regardless of efficiency and reliability. 
END



This was published 1 year ago


Forrest to build NSW's first LNG import terminal at Port Kembla

By Cole Latimer


June 4, 2018 — 10.30am



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Fortescue Metals chairman Andrew "Twiggy" Forrest’s Australian Industrial Energy will build a floating LNG import terminal in Port Kembla to bring more gas to NSW and Victoria as soon as 2020.


The regasification facility, which will cost between $200 million and $300 million to construct, will also be NSW’s first LNG import terminal.










The LNG import terminal will be the first in NSW.CREDIT:MICHELE MOSSOP




The Port Kembla terminal will import up to about 100 petajoules of LNG, which could meet about 75 per cent of NSW’s total gas demand.


AIE chief executive James Baulderstone said the import terminal would "solve the gas shortage in NSW", while NSW Minister for Trade and Industry Niall Blair called it a "game changer" for the state.




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“From 2020, AIE plans to ship up to 1.8 million tonnes of LNG into Port Kembla. That’s enough gas to supply around 85,000 average homes for an entire year," Mr Blair said.


“NSW currently relies on various interstate sources for 95 per cent of its gas needs, which can be less reliable and more expensive. This proposal has the potential to provide long-term security of gas supply at competitive prices.”


AIE is also targeting Victorian customers.


"One of the reasons we chose Port Kembla is because it's at the intersection of the Eastern Gas Pipeline, so we can get gas into Victoria," Mr Baulderstone told Fairfax Media.


"Victoria is a much bigger market so that is how we get more volume. We've signed some Victorian deals already."



The majority of the gas will be provided to large manufacturers and businesses.

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It comes after the Australian Competition and Consumer Commission forecast a looming gas shortage on the east coast of up to 150 petajoules, and the government last year threatened gas companies with a mechanism that would slash exports unless they secured more domestic gas supply.


The new gas terminal is a lower-cost alternative to proposed interstate pipelines and a cross-country, $5 billion West to East gas pipeline, which could also alleviate a gas shortage.


The location of the new east coast gas terminal came down to a decision between two sites - Port Kembla or the Port of Newcastle. AIE chose Port Kembla as it is closer to large consumers of industrial gas as well as existing pipeline infrastructure.



The terminal will have storage tanks capable of holding around four petajoules of gas, equivalent to between 10 and 12 days of NSW’s total demand.


For the second stage of the development, AIE is investigating the construction of a new gas-fired power plant. It is understood this could include either expanding on existing small-scale power plants nearby to provide more energy to industrial users, or building a new 750-megawatt power plant.


Mr Baulderstone said it planned to develop this power generation between 2020 and 2022.


The facility will see LNG carriers visiting Port Kembla around every two to three weeks.
Who is AIE?



Australian Industrial Energy is led by the former Santos and Duet Group executive James Baulderstone, and Stuart Johnson, the head of Mr Forrest’s gas business, Squadron Energy. The consortium has the backing of Japanese firms Marubeni Corp and JERA, which is the world’s largest buyer of LNG.










Fortescue chairman Andrew Forrest. CREDIT:BLOOMBERG




JERA will supply the gas while trading house Marubeni provides infrastructure financing.


"The $200 million price tag is relatively small capital to these investors," Mr Baulderstone said.


AIE has already signed 12 memorandums of understanding with industrial users for the supply of gas but declined to name these groups.



JERA’s fuel business development and gas and power development senior vice president, Gaku Takagi, said the facility would be able to bring cheaper LNG to NSW.


“We believe we can make a major contribution to NSW and east coast energy supply competition and security,” Mr Takagi said.


Mr Baulderstone said AIE would work as quickly as possible to get the facility off the ground as the rising price of gas stretches Australian businesses' operating costs as they seek new sources of gas supply.










The floating regasification terminal will be built in Port Kembla Harbour.




“In recent times, wholesale gas prices have doubled, and in many cases tripled, in NSW. In addition, many industrial companies are now unable to secure gas for any period longer than 12 months,” Mr Baulderstone said.



“AIE is well placed to deliver firm, long-term gas on highly competitive pricing and terms as a soon as 2020.”


The development is a boon for NSW, which has traditionally imported gas for industry and power generation from Queensland.


AIE is planning to lodge its development applications within the next few months.


The project is similar to AGL's $250 million floating LNG import terminal and jetty proposed for Crib Point, in Victoria, which is slated to begin construction next year.










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Cole Latimer
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Covering energy and policy at Fairfax Media.










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