The Australian Energy Market Operator (AEMO)’s Victorian Gas Planning Report released in March 2018, without additional gas supply there is a potential shortfall in the market from 2022 and a potential shortfall in meeting peak Victorian winter daily demand in 2021. AGL Energy Limited’s proposed project is uniquely placed to address this challenge.

Most recently, AGL has executed two key sets of agreements in relation to its proposed liquefied natural gas (LNG) import jetty at Crib Point in Victoria. 

Firstly, the Development and Gas Transportation Agreements with APA Group for the development and construction of the Crib Point Pakenham Pipeline and the ongoing transportation of gas from the proposed LNG import jetty to the domestic market was made. APA will continue early work including sourcing certain long lead-time items for the development of the proposed pipeline. Construction and operation of the pipeline is subject to regulatory approvals, the granting of the pipeline licence and final investment decision by the AGL Board; and

Secondly, the Works, Lease, and Berthing and Jetty Agreements with the Port of Hastings Development Authority for the long-term use of Crib Point Jetty Berth 2. The Port of Hastings Development Authority will begin jetty remediation works to prepare for AGL’s exclusive occupation of Crib Point Jetty Berth 2 for the continuous mooring of a floating storage and regasification unit (FSRU).

“AGL continues to work through key commercial and stakeholder engagement processes to enable a final investment decision on the Crib Point LNG Import Jetty during the 2019 financial year for delivery of first gas into the domestic market during the 2021 financial year,” the company said in a statement.

AGL Managing Director & Chief Executive Officer, Andy Vesey, said: “This project would provide AGL with a new source of competitively priced and secure gas supply and reduce our exposure to the declining, concentrated traditional gas supply sources in Victoria and to volatile Queensland gas markets. This project would enable us to deliver gas to our existing customer base securely and affordably and create a source of revenue growth by increasing supply to commercial and industrial customers.”

If AGL does not proceed with the project, AGL’s total financial exposure as a result of entering the above agreements would be up to $65m. This is in addition to AGL’s currently committed capital expenditure to the development of approximately $37m.

AGL is progressing its environmental approvals and licensing requirements for the project and continues to negotiate further key commercial arrangements for LNG supply and for the long-term charter of the FSRU.

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22nd June 2018