An Australian-led international consortium that includes two large Japanese companies has proposed building Australia's second liquefied natural gas import terminal, writes Russell Searancke.

Australian Industrial Energy (AIE) comprises local company Squadron Energy, Marubeni Corporation and JERA, reportedly the world's largest buyer of LNG.

The proponents have selected Port Kembla as the site in the state of what would be New South Wales' first LNG import terminal, which will include chartering a floating storage and regasification unit, construction of associated onshore and offshore facilities, and provision of gas to local customers in Australia's most populous state.

AIE said the terminal will have the ability to supply in excess of 100 petajoules per annum (94 billion cubic feet) of gas, sufficient to meet over 70% of the state's total gas needs.

Construction of the terminal is likely to require a capital investment of between A$200 million and A$300 million (US$230 million), and imports could be under way by 2020.

AIE chief executive James Baulderstone said New South Wales is "facing significant challenges in ensuring available and affordable gas supplies".

“In recent times wholesale gas prices have doubled, and in many cases tripled in NSW. In addition, many industrial companies are now unable to secure gas for any period longer than 12 months."

This is the second confirmed LNG import proposal for Australia; the first was AGL Energy's Crib Point LNG import terminal near Melbourne in the state of Victoria, which like New South Wales is facing gas supply shortages.

AGL expects to make a final investment decision on its terminal in 2019.

The A$250 million project will consist of a leased floating regas unit and have the capacity to handle up to 140 petajoules (132 Bcf) by 2020 or 2021.

Despite the fact Australia is a major LNG exporter, domestic gas shortages have emerged in the eastern states, not helped by the ban on onshore petroleum activity in Victoria and a suspension in activity in New South Wales.

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AIE plans new LNG terminal