Outer Harbor project site in February 2024; Source: Venice Energy

World’s first renewable-powered floating LNG import terminal closing in on new partners amid ‘strong’ interest

Australia-headquartered integrated energy company Venice Energy is holding formal talks with multiple potential partners with ties to the United States (U.S.) and Asia to secure the future of a proposed LNG import terminal project in South Australia, which is said to be the world’s first floating LNG import terminal which will run on 100% renewable energy.

Outer Harbor project site in February 2024; Source: Venice Energy

As the developer of the $300 million Outer Harbor LNG project in Port Adelaide, South Australia, Venice Energy has moved its search for development partners to formal negotiations with several companies in the wake of the interest – the firm characterized as “strong” – which several international energy development companies with connections to both the United States and Asia have shown in the project.

Kym Winter-Dewhirst, Venice Energy Chair, commented: “The good news is that we now have a formal written offer on the table and have made significant advances with companies that develop and operate LNG import terminals and energy-related infrastructure around the world. The companies we are negotiating with have the balance sheet strength and the on-the-ground expertise to fully develop this type of project.

“In a vote of confidence in both the project and Venice Energy, the companies have insisted that our project team remains in place during the two-year construction period and the commissioning phase. Obviously, there is still some distance to travel to lock in the best partners for the project, and we will work through these options via our own due diligence process.”

After the Australian LNG project was granted Crown Sponsorship by the South Australian government in 2020, environmental approval was received from the government in December 2021 with the project being designated as critical state infrastructure. Following over six years of planning and development, the Outer Harbor LNG project became shovel-ready, with all regulatory approvals in place. Venice Energy clinched an exclusivity agreement with Origin Energy in October 2023.

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A few months later, the firm cinched a new commercial understanding with AG&P LNG, a subsidiary of AG&P Group, to secure a converted floating storage and regasification unit (FSRU) for the LNG project at Port Adelaide. The Outer Harbor LNG project will consist of an infrastructure-based tolling terminal, two new berths, a 146 000 m3 FSRU capable of injecting 386 Tj per day throughput, and a gas pipeline connection into the state’s gas network.

With the transition to a zero-carbon economy in mind, Venice Energy designed the project to deliver on its commitment to a carbon-free era by powering onshore and offshore operations with 100% renewable energy, using low-carbon content from LNG to replace coal, and future-proofing its facilities to blend hydrogen and LNG to enable further carbon footprint cuts.

The Australian player intends to operate the infrastructure using a tolling model, in which customers will source their own LNG and pay a fee to utilize the terminal facility, which will regasify imported LNG and inject it into the South Australian and Victorian gas networks. Once it begins, the project’s construction is estimated to create more than 350 construction jobs and around 100 new direct and indirect jobs following commissioning. According to Winter-Dewhirst, the formal partner agreements are being targeted for finalization alongside a push for a final investment decision by August 2024 to enable a construction start-up date in October.

As the ‘2024 Gas Statement of Opportunities (GSOO)’ by the Australian Energy Market Operator (AEMO) predicts a looming domestic gas shortage in the south-eastern states from 2026 onwards, Venice Energy claims that these findings underscore the central thesis driving its import terminal project in South Australia, such as simplicity of connection, flexibility and security of supply, and competitive pricing for Australian customers.

Upgrading the existing 687 km SEA gas pipeline, stretching from the Iona underground storage at Port Campbell, west of Melbourne, to Adelaide, which is said to play “a pivotal role” in the viability of the project, will enable the LNG terminal to supply both states in both directions, via a single connection, as it can supply more than 250 TJ/d of gas through this pipeline to the Iona storage facility.

John Nicholson, Venice Regas CEO, noted: “Access to global gas supplies via our terminal means gas will always be available to South Australia and Victoria. Without an adequate supply of new gas to the market, the forecast shortages mean industry and domestic consumers will face restricted supply and increased electricity prices from as early as 2026.”