Woodside floats gas imports as ‘quick fix’ for Victorian energy crisis

Australian oil and gas giant Woodside has urged Victoria to support plans for a floating import terminal in Corio Bay that would give the state the ability to receive cargoes of super-chilled liquefied gas from other parts of the country or overseas.

For the second time this year, the Australian Energy Market Operator (AEMO) has deemed Victoria’s gas supplies to be dangerously low, putting homes and businesses at a greater risk of shortfalls as cold weather increases demand for the fuel in heating.

Victorian Energy Minister Lily D’Ambrosio has signalled she will press for AEMO to be given the power to set guaranteed minimum gas storage levels at key national storage facilities such as Lochard Energy’s Iona Gas Plant near Port Campbell, which is running dangerously low.

However, Woodside, which operates gas projects in Western Australia and has recently acquired BHP’s 50 per cent interest in the production fields in Victoria’s Bass Strait, on Thursday said there were “no easy solutions” to the worsening energy crisis.

Because investing in new sources of local supply can take a long time, Woodside chief executive Meg O’Neill said giving Victoria the capacity to start importing liquefied natural gas (LNG) shipments could offer the state a short-term lifeline and ease the crunch.

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“The quick fix – and it’s the quick fix that Europe is pursuing as well – is to bring in floating storage and re-gas facilities to be able to use LNG when you have these demand surges,” O’Neill told The Age and the Herald. “We are continuing to work with Viva on an opportunity to bring LNG into their Geelong facility.”

While Australia is one of the world’s top gas exporters, massive amounts are locked in to contracts to be sold to overseas buyers, or are in faraway parts of the country where it is either too expensive or impossible to supply demand centres in the south that need the fuel the most. Victoria’s offshore gas fields in the Bass Strait, which have traditionally supplied up to half of the eastern seaboard’s gas demand, have been now in rapid decline.

Viva Energy, owner of the Geelong oil refinery, is proposing to develop Victoria’s first LNG import terminal at the site to receive liquefied gas from anywhere in the world and turn it back into vapour. Woodside struck an agreement last year to supply gas from WA to Victoria, if the terminal proceeds.