AIE signs foundation customer for Port Kembla FSRU project

Australian Industrial Energy (AIE) said it has reached a preliminary agreement with EnergyAustralia to provide 15PJs of natural gas per annum, from its Port Kembla gas terminal (PKGT).

Commencing January 1, 2021, the five-year contract will supply gas for EnergyAustralia’s residential and industrial customers as well as for electricity generation, AIE said in its statement.

This deal follows the NSW Government’s decision in April 2019 to award development consent to AIE’s Port Kembla gas terminal (PKGT), creating a pathway for the terminal to be constructed by midlate 2020.

The $250 million PKGT project could supply more than 70 percent of the state’s gas needs. Having now received planning consent, AIE’s PKGT project is the most advanced LNG import terminal project on the Australian east coast, the company said.

The AIE joint venture partners, Squadron Energy, Marubeni Corporation and JERA noted that the deal with EnergyAustralia is the first of many agreements AIE expect to announce over the coming months.

Speaking on behalf of the AIE JV partners, Squadron CEO Stuart Johnston said, “We have negotiated a market competitive, oil-linked price with EnergyAustralia.”

“Further to our agreement with EnergyAustralia, AIE is deep in negotiations with a range of industrial businesses looking to sure up supply over the coming years,” Johnston said.

The commitment by EnergyAustralia will provide a significant underwrite against the annual capacity of AIE’s Port Kembla gas project. It represents another major step towards making the PKGT a reality within the next 18 months, the company said.

The AIE joint venture partners expect to make a final investment decision to proceed with the terminal in the next few months, subject to further firm customer contracts.