Australian state rejects AGL Energy's plan to import LNG

[MELBOURNE] Victoria state on Tuesday rejected a plan by AGL Energy to build a liquefied natural gas (LNG) import terminal, effectively killing a proposal designed to help fill an expected shortfall in gas supply in southeast Australia from 2024.

The state's Labor government ruled against the project due to concern the import terminal would damage internationally recognised wetlands. The project was opposed by an unusual coalition of environmental, indigenous and community groups alongside conservative politicians.

"It's very clear to me that this project would cause unacceptable impacts on the Western Port environment and the Ramsar wetlands. It's important that these areas are protected," Victoria's Planning Minister Richard Wynne said in a statement.

The decision dealt a blow to AGL, which said it has already spent A$130 million (S$133 million) on the Crib Point project.

The plan also involved a pipeline to be built by APA Group . The floating terminal was to be supplied by Hoegh LNG .

AGL said it was considering its position.

"Nothing has changed in that we are a big and great gas trader," Chief Executive Brett Redman told analysts, adding AGL would be willing to buy gas from others looking to import LNG.

Australia is the world's largest exporter of super-cooled LNG, but domestic gas supplies face a shortfall as output declines from the Bass Strait fields off the coast of Victoria.

AGL first proposed importing LNG to Australia in 2016. Its plans were held up after opponents pressed for an extended environmental review, saying chlorinated, chilled seawater discharged by the floating storage and regasification unit (FSRU) could harm sea life and hurt tourism.

"This is a huge outcome," said Nicholas Aberle, who led Environment Victoria's campaign against AGL. "It's almost unprecedented for environmental effects statements to stop environmentally damaging projects." Australia's richest man, Andrew Forrest, is now in pole position to be the first to start importing LNG into Australia, with a terminal at Port Kembla in New South Wales, racing against four other LNG import proposals.

Australia's energy market operator this week said the Port Kembla terminal meant Australia would not face a gas supply shortfall until 2026, two years later than previously forecast.

REUTERS