Australia’s Victoria seeks further gas storage capacity

Spanish Market: Electricity, Natural gas
12/09/24

The state Labor government of Victoria will introduce laws to allow offshore gas storage projects in its waters as it grapples with a predicted supply deficit because of declining Bass strait production.

Victoria, which is Australia's largest user of household and commercial gas, will allow gas to be stored in empty gas reservoirs offshore in a bid to boost supply security, Victorian energy minister Lily D'Ambrosio said on 11 September. But the state's waters extend three nautical miles offshore, meaning the laws will not cover most of the state's depleted fields in the Otway and Gippsland basins which lie in federally administered zones.

Victoria's largest storage is the 26PJ (694.3mn m³) onshore Iona facility in the state's west, owned by domestic gas storage firm Lochard Energy which plans to expand its capacity by 3PJ.

But further capacity is needed to help bridge seasonal gaps, with the new laws possibly advancing privately-owned GB Energy's Golden Beach gas project, which could add 12.5PJ of storage to the grid.

The Gippsland basin joint venture (GBJV) and Kipper Unit JV which feed the three Longford gas plants in the state's east have historically supplied about 60pc of southern states' gas, but operator Exxon plans to close one of the plants in July-October, cutting the 1.15 PJ/d facility's capacity to 700 TJ/d and further to 420 TJ/d later this decade.

GBJV operated just 50 producing wells and six gas platforms in the 2024 southern hemisphere winter, with Exxon expecting a 70pc reduction in the number of wells from 2010 levels by next winter.

The Australian Energy Market Operator's (Aemo) 2024 Victorian Gas Planning Report (VGPR) update confirmed the need for greater supply in Victoria, as declining demand would not offset the loss of supply from the GBJV.

Peak southern state winter demand exceeds 2 PJ/d, but at full capacity, pipelines linking Queensland state's coal-bed methane fields to the southern states can meet only 20pc of such demand.

Coal and gas-dependent Victoria this year approved its first nearshore gas project in a decade as the government softens its anti-gas stance.

LNG import plans

The possibility of LNG imports is firming in Victoria, with Australian refiner Viva Energy announcing public consultation has begun on its supplementary environmental effects statement (EES) for a planned floating storage and regasification unit, adjacent to its 120,000 b/d Geelong refinery.

The Geelong LNG terminal would have the capacity to supply more than half of Victoria's current gas demand, Viva said on 12 September. The terminal's surplus gas could also flow into the connected southern states of South Australia, New South Wales and Tasmania.

A public hearing into the proposal, which could see the import of 45 cargoes/yr, is expected to be held in December before an independent committee reports to the state's planning minister next year.

Subject to a final investment decision, works could commence in 2026 to deliver first gas for winter 2028, Viva said, aligning with Aemo's expected shortfall of 50PJ in that year.

By Tom Major

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19/05/25

EU gas stockbuild rises further in 1H May

London, 19 May (Argus) — Injections into EU gas storage facilities quickened in the first half of May from the second half of April, remaining above the previous two years' pace. Net injections across the EU averaged 3.42 TWh/d on 1-15 May, up from 2.7 TWh/d in the previous two weeks and 2.82 TWh/d over the same period of 2024, the most recent data from EU transparency body GIE show ( see injections graph ). The stockbuild was also slightly higher than on 1-15 May 2023, although below the 3.74 TWh/d average in 2018-22. The EU needs a strong stockbuild this summer to close the gap to the two-year average, as storage facilities entered this summer at a much lower base of 388TWh in store, or just 34pc of overall technical capacity. Stocks have since increased to 497TWh as of the morning of 16 May, but this remains 238TWh lower than the 16 May average in 2023-24, although much closer to the 2018-22 average of 503TWh ( see stocks graph ). The German government's recent decree lowering the country's storage target to 70pc by 1 November from 90pc previously reduces required injections in the EU's biggest storage market, although operator Sefe's continued failure to market significant capacity at Rehden may require a strong stockbuild late in the season. And European legislators' push to drop the EU-wide target to 83pc and to essentially abolish intermediary fill targets further decreases the pressure to inject immediately, but could lead to some firms taking a wait-and-see approach while the legislation is finalised. Prompt prices across major European hubs have dropped to significant discounts to the front-winter price so far this month, incentivising injections. The TTF day-ahead price averaged €34.32/MWh on 1-15 May and the balance-of-month €34.37/MWh, each well below the average for the winter 2025-26 contract of €35.92/MWh. An even larger gap opened up in Germany, with the day-ahead on average €2.32/MWh below the winter and the balance-of-month €2.25/MWh beneath it. Sendout from EU LNG terminals remained strong at 4.3 TWh/d on 1-15 May, slightly down from 4.4 TWh/d in the second half of April but well above 3 TWh/d over the same period of 2024. Chinese LNG demand has continued to hold much weaker on the year after a mild winter that left stocks high, along with booming domestic production and stronger pipeline imports from Russia. This has meant that Europe has faced less competition for marginal cargoes. Additionally, a slight drop in gas demand for power generation has left more gas available to add to storage than a year earlier. The EU's gas-fired power generation slipped to 23.1GW on 1-15 May from 23.7GW a year earlier, according to data from Fraunhofer ISE. By Brendan A'Hearn EU net injections GWh/d EU stocks TWh Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

US LNG developers brush off tariff concerns

19/05/25

US LNG developers brush off tariff concerns

Houston, 19 May (Argus) — The US' biggest LNG developers have little worry over potential costs from President Donald Trump's 25pc steel and aluminum import tariffs as they prepare to spend billions building new export infrastructure. The top exporters of US LNG so far in 2025 — Cheniere, Venture Global and Sempra — are pushing ahead with plans for new terminals and expansions, dismissing concerns that Trump's protectionist trade policy could throttle projects that would help add more than 80mn t/yr (12bn cf/d) of capacity to the world's largest supplier of LNG by 2030. Sempra and Venture Global both estimate that just 1pc of capital expenditure for the first phases of their respective Port Arthur and CP2 projects is exposed to tariffs. Sempra plans to spend $13bn on the 13.5mn t/yr first phase of the Port Arthur, Texas, project. Venture Global expects to spend $27bn-28bn on both phases of the 28mn t/yr CP2 plant in Louisiana, but has yet to reach a final investment decision for phase 1. About 90pc of the Port Arthur project's spending is with domestic suppliers and contractors, Sempra chief executive Jeffrey Martin told investors in an earnings call on 8 May, with steel for the first liquefaction train fully sourced in the US. The two-train first phase is expected to have its trains on line in 2027 and 2028. Disruptions during the Covid-19 pandemic had already forced the company to identify and adapt to risks in the supply chain. "We expect those diversified sources to help us better manage and mitigate tariff risks," Sempra chief financial officer Karen Sedgwick said. She later added that the firm preemptively began importing materials for Port Arthur LNG into a foreign trade zone in February, a tactic that can reduce or delay duties payments . Neither of Venture Global's existing 12.4mn t/yr Calcasieu Pass and 27.2mn t/yr Plaquemines plants in Louisiana faces tariff risks, chief executive Mike Sabel told investors on 13 May. But up to $350mn of materials in the 20.2mn t/yr first phase of CP2 are subject to duties. The 26 prefabricated trains in phase 1 are being built in Italy and represent the largest exposure (see table) . Venture Global expects 12 of those trains to arrive in Louisiana by the end of the year. Inflation and high interest rates represent a bigger threat, Sabel said, calling it "probably the toughest environment to build our projects since the 1970s". "It's something we work and live every day because of the scale of construction we're doing," said Sabel, whose company has 73.8mn t/yr of capacity in development. Sempra expects to make a final investment decision on the 13.5mn t/yr second phase of Port Arthur LNG by the end of 2025. Venture Global is eyeing a decision on CP2's first phase by mid-2025. ‘Our best salesmen for US LNG' Cheniere, the largest LNG exporter in the US, faces no tariff risks at its 11.45mn t/yr Corpus Christi, Texas, stage 3 expansion. The seven-train project "is basically complete", chief executive Jack Fusco told investors on 8 May, with all materials on site and construction ongoing. The company expects to have the first four trains producing LNG by the end of the year and plans to reach an investment decision this year to add trains 8 and 9. The largest portion of spending for those trains will be on labor, and "a fair amount" of equipment and materials will be sourced domestically, limiting tariff exposure, Fusco said. The company has already spent $500mn in early procurement. Cheniere also plans to jump on what it sees as a friendly permitting window under the Trump administration and add about 17mn t/yr to its existing 33mn t/yr Sabine Pass plant in Louisiana. Fusco said he has been meeting with administration officials in Washington to discuss trade issues and how LNG fits in Trump's energy agenda. The first Trump administration "were some of our best salesmen for US LNG, and that's continued during the president's current administration", Fusco said. Since taking office in January, Trump's administration has worked to buttress the US LNG industry, quickly ending the Biden administration's pause on issuing licenses to export to countries that do not have free trade agreements with the US and making it easier for projects to receive extensions for such licenses. But the new projects by Cheniere, Venture Global and Sempra may benefit from having already been in at least preliminary development when Trump unveiled the metals tariffs in February. For developers in earlier phases who are just now procuring supplies, "it's a different story", Alex Whittington, director of international affairs at Cheniere, told a conference in April. By Tray Swanson Venture Global CP2 Phase 1 - Tariff Exposure Component Country of Origin Delivery Status Tariff Exposure Liquefaction trains Italy First module delivery in mid-2025 $145mn-255mn Pre-treatment modules Fabricated in US First module delivery in mid-2026 $10mn-20mn Power island components US, Europe, Vietnam Delivered, major equipment in US storage $3mn-5mn Piperack modules, structural steel and pipe Various Piperack and structural steel procured $6mn-10mn Balance of plant Various Major bulk materials procured $40mn-50mn LNG tanks Various 9pc nickel steel plate and pipe piles procured $6mn-10mn Total $210mn-350mn — Venture Global Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

EU, UK to ‘work towards’ linking carbon markets

19/05/25

EU, UK to ‘work towards’ linking carbon markets

London, 19 May (Argus) — The EU and UK agreed to work towards linking their respective emissions trading systems (ETS), as part of their common understanding agreement concluded at a summit in London today. "The European Commission and the United Kingdom share the view that a functioning link between carbon markets would address many of the issues raised in respect of trade and a level playing field," the agreement states. A linking agreement should exempt both jurisdictions from their respective carbon border adjustment mechanisms, according to the common understanding, and the linked systems should cover power and industrial heat generation, and domestic and international maritime and aviation emissions. The statement specifically states that any link "should not constrain the European Union and the United Kingdom from pursuing higher environmental ambition". It also underlines that the UK ETS's supply cap and its emissions reduction pathway are "guided by" the country's Climate Change Act and nationally determined contributions to the Paris climate agreement, and that these should be "at least as ambitious" as the EU's. The UK has legally binding targets to cut its greenhouse gas (GHG) emissions by at least 68pc by 2030 and 81pc by 2035, both compared with 1990 levels. The EU aims to cut its net GHG emissions by 55pc by 2030, and is yet to set a 2035 target. Both jurisdictions are targeting net zero emissions by 2050, while they share the "same interests" in addressing climate change, commission president Ursula von der Leyen said today. Linking the systems would "save British businesses £800mn in EU carbon taxes", UK prime minister Keir Starmer said today, without specifying a timeframe for the savings. A study commissioned by a range of utilities and published last week found that linking the two systems would save up to €1.2bn on lower hedging costs resulting from improved market liquidity and lower bid-offer spreads. Today's agreement provides no timeline for linking the systems. The process to negotiate and link the Swiss ETS to the EU's scheme took almost 10 years. Alongside plans to work towards linking the EU and UK ETS, the jurisdictions also alluded in the agreement to continuing "technical regulatory exchanges" on energy technologies including hydrogen, carbon capture and storage and biomethane. And they will "explore in detail the necessary parameters" for the UK's potential participation in the EU's internal power market. By Victoria Hatherick and Georgia Gratton Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

US House panel votes down Republican megabill

16/05/25

US House panel votes down Republican megabill

Washington, 16 May (Argus) — A key committee in the US House of Representatives voted today to reject a massive budget bill backed by President Donald Trump, as far-right conservatives demanded deeper cuts to clean energy tax credits and social spending programs. The House Budget Committee failed to pass the budget reconciliation bill in a 16-21 vote, with four House Freedom Caucus members — Ralph Norman (R-South Carolina), Chip Roy (R-Texas), Josh Brecheen (R-Oklahoma) and Andrew Clyde (R-Georgia) — voting no alongside Democrats. A fifth Republican voted no for procedural reasons. The failed vote will force Republicans to consider major changes to the bill before it comes up for a vote on the House floor as early as next week. Republican holdouts say the bill would fall short of their party's promises to cut the deficit, particularly because it would front-load increased spending and back-load cuts. The bill is set to add $3.3 trillion to the deficit, or $5.2 trillion if temporary provisions were permanent, according to estimates from the nonpartisan Committee for a Responsible Federal Budget. Some critics of the bill said the proposed cut of $560bn in clean energy tax credits is not enough, because the bill would retain some tax credits for new wind and solar projects. "A lot of these credits have been in existence for 30 or 40 years, and you talk about giveaways, we want to help those who really need help," Norman said ahead of his no vote. "That's the heart of this. Sadly, I'm a no until we get this ironed out." Negotiations will fall to House speaker Mike Johnson (R-Louisiana), who can only lose three votes when the bill comes up for a vote by the full House. But stripping away more of the energy tax credits enacted in the Inflation Reduction Act could end up costing Johnson votes among moderates. More than a dozen Republicans on 14 May asked to pare back newly proposed restrictions on the remaining clean energy tax credits. Ahead of the failed vote, Trump had pushed Republicans to support what he calls the "Big Beautiful Bill". In a social media post, he said "Republicans MUST UNITE" in support of the bill and said the party did not need "GRANDSTANDERS". The failed vote has parallels to the struggles that Democrats had in 2021 before the implosion of their push to pass their sprawling "Build Back Better" bill, which was later revived as the Inflation Reduction Act. Republicans say they will work over the weekend on a compromise. The House Budget Committee has scheduled another hearing at 10pm on 18 May to attempt to vote again on the budget package, but any changes to the measure would occur later, through an amendment released before the bill comes up for a vote on the House floor. By Chris Knight Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

UK offshore wind sector needs stability: Industry

16/05/25

UK offshore wind sector needs stability: Industry

London, 16 May (Argus) — The UK's offshore wind sector requires urgent government action to restore investor confidence and meet 2030 decarbonisation goals, industry leaders warned at the All-Energy conference in Glasgow on 14 May. Speaking at the panel Offshore Wind 2024: A Year in Turmoil, experts called for policy stability, streamlined consenting and stronger supply chains to unlock the sector's potential. Chair of industry body Global Wind Energy Council (GWEC) Jonathan Cole criticised the government's proposed locational marginal pricing reforms, arguing they introduce complexity and deter long-term investment. "We're not building coffee shops and bookstores, we're building infrastructure that will sit in one location for generations," he said. Cole warned that a 1pc rise in capital costs could erase £20bn in projected benefits, urging policymakers to prioritise stability over "speculative" market changes. ScottishPower Renewables' chief executive, Charlie Jordan, echoed the need for clarity, highlighting the £75bn investment in UK grid upgrades, particularly in Scotland, as critical for jobs and future-proofing the energy system. He said the ongoing review of electricity market arrangements (Rema) risks undermining grid investment and called for practical measures like general taxation to protect consumers from rising transmission costs. Both panellists stressed the need to accelerate consenting processes to maintain project timelines. They also emphasised strengthening the UK's offshore wind supply chain to compete with nations like South Korea and France. "Without swift action on ports, manufacturing and grid connections, we'll lose opportunities," Jordan said, pointing to Scotland's ScotWind seabed leasing programme and Celtic Sea offshore wind projects. Scotland has 3GW of offshore wind capacity across seven wind farms, including the 1.1GW Seagreen and 30MW Hywind Scotland. Projects under construction, such as the 450MW Neart na Gaoithe and 882MW Moray West, bring the nation's pipeline to 10.2GW expected by 2030, aligning with the Scottish government's 11GW target. The ScotWind seabed leasing round saw 25GW of leasing options agreements awarded in January 2022, with projects like the 2.1GW Berwick Bank, 1.1GW Inch Cape and 560MW Green Volt in planning. But recent setbacks have raised concerns about deliverability. The cancellation of Danish utility Orsted's 2.4GW Hornsea 4 project in May, despite a 15-year contracts for difference (CfD) at £83/MWh, underscores the sector's challenges. Orsted cited rising costs and "execution risks" from installing 180 turbines, highlighting economic unviability under current conditions. Transparency in energy pricing was deemed essential for public support. Jordan said prohibitive costs, driven by taxes and seabed leasing fees, make UK industrial users 70pc less competitive than their European counterparts. Cole added that clear communication is vital as discussions about market reforms and potential EU alignment intensify. With the upcoming seventh round of the CfD scheme and ongoing government consultations, the panel urged decisive action to stabilise the sector. "This is the time for long-term vision, not academic experiments," Cole said. By Timothy Santonastaso Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

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