March 19, 2021 [Financial Review] – Dutch oil and petrochemical storage group Vopak has joined a throng of firms wanting to cash in on Victoria’s looming gas shortage with a proposal to build an LNG import terminal in which it says two “reputable” customers have expressed interest.

Vopak Australia’s managing director, Fulco van Geuns, said he was undaunted by the five other companies vying to set up import terminals in southeast Australia. Two are already proposed in Victoria – AGL Energy’s $250 million Cribb Point project and Viva Energy’s proposal to convert its Geelong refinery for LNG import.

Mr van Geuns viewed the looming crisis over the Victorian gas shortages as a prime opportunity for Vopak to dock a Floating Storage Regasification Unit (FSRU) in Port Phillip Bay.
“It’s very unlikely that all five of them will happen. Potentially one or two, but definitely not five,” he said, confirming analyst expectations that southeast Australia only has space in the market for two terminals.

Undeterred, Mr van Geuns is confident Vopak can take one of the two spots in the market because the company is already in talks with two customers, whose identities he couldn’t disclose, and LNG gas terminals are “core business”.
The Dutch multinational operates four liquefied natural gas (LNG) storage facilities globally with a further five under development.

“When it comes down to confidence, we are confident in the sense that we have received backing from two very reputable existing gas market parties,” he said.

It’s a combination of three or four years of hard work to settle on the fact that we believe there is a business case and that the best place to be is in Victoria.

— Fulco van Geuns, Vopak Australia managing director

“We cant’ currently disclose [their identities] because we are under confidentiality, but we would hope that in the near future, we will be in a position to release that information.“

While Mr van Geuns would not be drawn on the exact cost of the project, he said it would be “similar” to AGL’s $250 million Cribb Point project, one of the earliest LNG import projects to be proposed in the country.

AGL is still awaiting a recommendation from an advisory committee that heard 10 weeks of hearings on the project late last year. That will be followed by a ruling by Victorian planning minister Richard Wynne, expected by March 25.

The Dutch multinational spent three to four years assessing the venture after analysing the expected Victorian shortfall that the energy market operator says could occur as early as 2024.

Extreme volatility

“We’ve consistently studied potential locations. It’s a combination of three or four years of hard work to settle on the fact that we believe there is a business case and that the best place to be is in Victoria,” he said.

The FSRU, docked in Port Phillip Bay, would connect to a subsea pipeline and over land majority-owned by Melbourne Water to the Victorian gas pipeline infrastructure.

Progress on all Australia’s five proposed LNG import terminals has been slowed by a variety of factors, including planning battles, venture restructuring and a reluctance of gas buyers to commit to long-term purchasing of imports.

Andrew Forrest’s proposed LNG import terminal at Port Kembla is well on the way to starting major construction, undeterred by last month’s extreme volatility in LNG prices that some say risks slowing momentum at all five import projects on the southeast coast.

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