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Origin Energy test may mean more gas for domestic market

Origin Energy test may mean more gas for domestic market

CANBERRA: Origin Energy’s Australia Pacific LNG plant at Gladstone has finished a 90-day test in which it was required to produce more LNG than its official capacity, meaning the project can now decide whether it puts more gas into domestic markets, rather than export it. APLNG, which will not be targeted by Malcolm Turnbull’s gas export restrictions, can export a lot more gas than its contracts require it to, with Origin previously saying it had 67 petajoules a year of excess gas it could either sell on international spot markets or to domestic buyers.

The Prime Minister’s export restrictions target the Santos-led Gladstone LNG project, the only one of three projects at Gladstone that draws some of its gas from domestic markets. The other two projects, APLNG (which has ConocoPhillips as an operating partner) and Shell’s Queensland Curtis LNG, are “net contributors” to domestic markets, meaning the coal-seam gas fields developed with those LNG projects can provide more gas than they export. Now the APLNG lenders’ production test is over, a truer picture of the longer-term impact of $70 billion of Queensland boomtime LNG spending on domestic markets, and how much the three plants intend to export, is expected to emerge. GLNG had reduced exports and instead supplied gas to APLNG during the production test. And, as reported in The Australian today, Shell is having some unspecified operational problems with its project that reduced exports in the second quarter. The completion of the APLNG lenders’ production test means $US3.4bn of shareholder guarantees relating to the project’s US$8.5 billion project financing will be formally released.

Origin said the plant performed well in all key areas during the test, averaging more than 10 per cent more LNG production than its nameplate capacity, with high thermal efficiency and minimal downtime. “This outstanding result underscores the quality of Australia Pacific LNG’s resources and facilities, and is a credit to our joint venture partners and in particular, all those people who work tirelessly across the downstream and upstream operations,” Origin chief Frank Calabria said. “We’re proud of Australia Pacific LNG’s contribution as a major supplier of natural gas to Australia’s east coast, meeting approximately 20 per cent of total annual demand, and in exporting LNG to provide a cleaner source of energy to customers in Asia,” Mr Calabria said.