Australia’s first floating storage and regasification unit to receive shipments of liquefied natural gas has been ordered and negotiations for a second FSRU are at an advanced stage as the nation addresses a supply gap in its eastern states’ domestic gas markets.

Australian company AGL will charter the FSRU Hoegh Esperanza for the first LNG import project, Crib Point, in the state of Victoria.

A second import terminal is being developed in Port Kembla, in the state of New South Wales, by Australian Industrial Energy (AIE).

Norway's Hoegh LNG, owner of the Hoegh Esperanza, said earlier this month it is in final charter negotiations with AIE over the supply of an FSRU vessel.

Hoegh’s chief executive Sveinung Stohle says Australia is “clearly a prime target for us and we have seen that the two clients we have there are making very good progress in completing their projects”.

Stohle adds that there has been a “real rebound in the FSRU market over the last few months despite Covid and everything else that came with it, mainly driven by the very competitive price for LNG, but also the energy transition and the move away from coal and oil”.

In Australia’s heavily populated eastern states, demand for gas in the domestic market is not being met by domestic production despite three Queensland-based LNG projects that are diverting gas into the domestic market.

“Additional gas supplies are urgently needed for the southern states, particularly Victoria, where gas is predominantly used for manufacturing, for commercial purposes such as restaurants and for home heating, cooking and hot water,” says the consultancy firm EnergyQuest.

“LNG imports are the only means of securing supply sooner rather than later and at the necessary volume.”

LNG

LNG import vessels queue up for Australia