Aligning stars: making LNG imports happen in Australia

Abstract

We present the inputs and results of a discounted cash flow model which details the requirements for an import terminal to eventualise. The key requirement is high certainty cash flows from foundation users. This can be made possible through capacity booking which can be potentially underwritten by governments to ensure security of supply during peak winter months. The out-chartering of the floating storage and regasification unit (FSRU) to serve as a liquefied natural gas (LNG) carrier during the peak northern winter will provide an additional revenue source. We also analyse the legacy supply decline and various price setting mechanisms for the southern states which will soon turn net importers. We will describe the status of the four projects in the pipeline and identify milestones. We conclude that an import terminal provides an alternative proposition in the southern states considering the highly seasonal demand profile, the decline of Gippsland Basin production, and the relative inflexibility of coal seam gas. Further, FSRUs can be redeployed to other regions, which reduces stranded asset risk from pipeline expansions, given Australia’s net zero targets.