Empower your business with deal pipelines in Australia

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now one of the priorities for australia right now clearly is energy and getting enough of it in the right place at the right time earlier this week the competition regulator the a triple c warned there will be a serious shortage of gas supplies around 10 of demand next year it raises serious questions about whether the government will need to pull a so-called gas trigger to divert supplies destined for overseas into the local market earlier this week i caught up with the a triple c chair gina cascottlieb about this report and here's just a little of what she says about how that gas shortfall will be filled exporters have not behaved in ance with the spirit of the heads of agreement that they entered into with the government in 2021 that heads of agreement had the commitment to first supply uncontracted gas to the domestic market and that has not occurred which makes the work that squadron energy is doing to build a gas import terminal at wollongong's port kembla a high priority squadron is a part of andrew and nicola forrest's private company tatarang it's recently appointed chief executive is eva hanley who i caught up with earlier this week and first off this gas terminal to bring gas in from other parts of australia to the east coast of australia is it a pipe dream or is it going to happen it's certainly not a pipe dream ross we're well and truly in construction mode and the construction of the terminal will be finished by december next year by december next year correct but then the shortfall is going to be in winter next year so is there any chance you can actually speed this project up to get the gas supplies into the east coast next year to avert the shortage that that gina cascatli was talking about when the a triple c report came out that's exactly what i thought so we've got a team looking at whether we can bring construction forward to complete the terminal by june next year we have the vessel already so that will be potentially available as well and we're just keen to hear from stakeholders whether that's a worthwhile endeavour okay so let's just explain for people how this project would work so it might be gas from queensland say for example would be pretty typical from gladstone would come down the east coast to this terminal now we should point out that this is liquefied natural gas just as korean customers chinese customers japanese customers would buy from queensland except effectively we'd be buying this in the east coast how do you turn that liquefied natural gas back into ordinary gas it can be used by business and be used by households so you're right ideally the gas comes from queensland into new south wales at the moment it goes via pipeline but the pipeline infrastructure is extremely congested particularly that's what they say so australian pipeline authority apa group the pipelines are full so even if you want to pull that gas trigger as the government might you've still got to have the gas find capacity in those pipelines yes which there isn't so you need to find another way to get the gas from queensland to new south wales and that's where our terminal comes in because we can put the gas on the ship in queensland and very quickly ship it down into port kembla and inject it straight into the east coast gas network okay so hang on there's one bit of it that i'm missing though there's got to be a way in which you convert that liquefied natural gas back into actual gas so that means there's a vessel and i know many countries around the world now have vessels that degassify as they say or yeah create the gas have you got one of those vessels we do we've secured a vessel called the hogue galleon and that's a floating storage re-gasification unit so called fsiu and that ship enables us to take lng from queensland uh turn it back into its natural form and pump it into the gas network in new south wales so is this a recent thing that you've got this ship because up until now there's been no word of this ship actually turning up correct we went unconditional with the contract a few weeks ago and it's a great uh ship because it's only one of 43 operating in the world so they're very rare and very highly in demand okay so then i go back to gina cascottlieb and the way in which the gas system works at the moment there is contracted gas that goes into partners from say korea japan wherever it might be then there's uncontracted gas and what she was talking about is the problem of uncontracted gas not coming back to australia but going into those parts would you be buying contracted gas or uncontracted gas we would be buying uncontracted gas and we're hoping to enter into commercial discussions with the big lng producers in queensland to ensure that some of that additional gas is able to be provided into the domestic market but d-linked to lng prices so that australians are paying fair price for their gas so how does that work because surely all of those prices are at international parity prices now so you'd simply be paying the market price because why would i as a gas producer in queensland want to sell you the gas cheap when i could put it into the global markets and sell it for a more expensive price yes that's right and that's the same issue that we have with the gas coming through the pipeline so the first thing to overcome is that there needs to be gas coming into the domestic market the second one is to enable it to not only come by pipeline but to come by ship at the same price so what what you do is effectively create a competition in the transport so i understand that but do you need the government to pull that gas trigger the controversial gas trigger to ensure that the gas supplies would come to you to be able to be put onto that ship yes at this point we haven't had any agreement from the gas producers so i'm hopeful that we will but if we can't the trigger is obviously a very clear mechanism all right so then we get the ship that comes down the east coast of australia from queensland you've got the gas you've turned that into gas it's now able to go into the east coast network to take pressure off the prices to create supply who do you sell it to oh great question ross uh ideally we'd sell it to the three gentlers so origen agl and energy australia uh they have large contracted customers uh and our understanding at this point is that they don't need any more gas oh hang on well you think so so what we're trying to do is look at other options so we need to sell the gas to somebody we've got two options then we either sell it directly to customers uh so commercial industrial manufacturers and we're looking at that now and the other option is that someone intervenes like aimo the market operator to procure gas on behalf of the whole gas network so in other words amo says there's a gas shortage we need more gas we'll buy that gas put into the system to take pressure off the prices yes but the three big gentiles that you talked about origin energy australia and agl they're not going to be happy about that because clearly that could squeeze their profit margins well my focus is on making sure that new south wales has enough gas in the supply system and our terminal can provide 75 of the gas that new south wales needs so it more than covers the shortfall in fact it's double what the shortfall is and so does that take pressure off prices and supply issues in victoria and also in south australia you're right so at the moment we get most of our gas in new south wales from queensland via pipeline and victoria via pipeline ideally what we want is to stop needing victorian gas so new south wales should be independent from both states and by having this terminal up and running it means we don't need gas to come from victoria in fact we can pipe it down the other way so they benefit as well i've got to say ever there's one small thing about this i'm still getting wrapping my head around the fact that you could get gas in support kembla next year though there's a gas shortage the people who would otherwise bite off you are saying we don't need your gas i find that really gobsmacking it's an interesting market dynamic ross it's going to be interesting to see what amo does as well eva hanley many thanks for your time thank you very much