Norway’s Hoegh LNG has secured the contract to supply the floating storage and regasification unit for what could be Australia’s first liquefied natural gas import terminal.

Australian Industrial Energy (AIE) confirmed on Tuesday that it had signed a long-term charterparty agreement for Hoegh to supply the FSRU that will operate at its Port Kembla Energy Terminal, being developed in the state of Victoria.

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The agreement will see the Hoegh Galleon FSRU take on LNG cargoes from visiting carriers at AIE’s Port Kembla LNG import project, that will then be stored onboard in double-hulled tanks.

When needed, the LNG will be regasified onboard the FSRU and transferred via high pressure loading arms into the onshore underground pipeline being built by Jemena.

We share AIE’s clean energy vision and look forward to working together on the next generation capabilities that will ensure that the Port Kembla Energy Terminal remains at the forefront of the energy transition

Hoegh’s chief development officer, Richard Tyrrell

Construction has already started on the Port Kembla Energy Terminal, with the project expected to be operational by mid-2023.

The A$250 million (US$177.8 million) import terminal at Port Kembla, near Wollongong, has consent to receive up to 46 LNG cargoes per year and the project is intended to handle some 1.8 million tonnes per annum of LNG under the existing development consent.

Despite being one of the world’s largest exporters of LNG, Australia’s east coast gas market is facing the prospect of domestic gas supply shortfalls in the coming years.

“With the phasing down of Australia’s fossil fuel industry already underway, the Terminal will be critical to ensuring hundreds of thousands of Australian businesses and households avoid supply shortfalls from 2023 onwards,” AIE chairman Andrew Hagger said.

“Now that critical infrastructure agreements and approvals are in place for the Terminal, we look to NSW and Victorian natural gas retailers to now take active steps to help resolve the energy security crisis they have warned about.”

New FSRU being designed to handle green hydrogen

AIE also revealed on Tuesday that it had agreed to collaborate with Hoegh on the future design and development of a new generation FSRU capable of receiving “clean fuels”, which can be used as part of future green energy supply chains.

AIE said the new design FSRU would have the capability of delivering both natural gas and green hydrogen, or derivatives, unlocking opportunities for the terminal to support a potential future hydrogen energy industry in Australia.

“We share AIE’s clean energy vision and look forward to working together on the next generation capabilities that will ensure that the Port Kembla Energy Terminal remains at the forefront of the energy transition,” said Hoegh’s chief development officer Richard Tyrrell.

AIE is part of Australian billionaire Andrew Forrest’s Tattarang group of companies, with AIE part of Tattarang’s dedicated energy division, Squadron Energy.

Forrest is also chairman of Fortescue Future Industries, which is part of Forrest's Fortescue Metals Group, and is aiming to commence commercial-scale green hydrogen production as early as 2023.

Green hydrogen is produced via electrolysis powered by renewable energy to split water into hydrogen and oxygen.

It is then targeting annual green hydrogen production of 15 million tpa by 2030, while it has set an even more ambitious goal of reaching more than 50 million tpa of green hydrogen production the following decade.