26-05-2025
Port Kembla Energy Terminal delayed until 2027 amid shifting gas demand
A New South Wales gas terminal is built, connected and ready to go but will not begin operations until at least 2027 as Squadron Energy delays the start amid shifting demand forecasts.
It comes even as energy authorities warn of looming east coast gas shortfalls.
The Port Kembla Energy Terminal — which has been completed and tied into the Eastern Gas Pipeline — will stay in "care and maintenance" mode until mid-2027, after a reassessment of customer needs and updated projections from the Australian Energy Market Operator (AEMO).
Squadron Energy executive general manager of operations, Stuart Davis, said the revised timeline reflected market conditions.
He said his company received a request from Egyptian state-owned company Egas for an extension as it was going through a sales process for the terminal.
Squadron last year announced it had secured LNG carrier vessel the Hoegh Galleon, a floating storage and regasification unit (FSRU) which could receive domestic or imported gas.
Mr Davis said the site would remain in "care and maintenance to ensure that when the Galleon turns up it is ready to go".
The company originally forecast it would start operating in 2026.
In March, AEMO's 2025 Gas Statement of Opportunities identified peak-day shortfall risks in southern states from 2028 — a shift from previous forecasts that had shortfalls arriving earlier.
However, the report still warned of deepening supply gaps from 2029 onwards, calling for "structural" investment in new supply, pipelines, or storage to avoid market imbalances.
The Port Kembla terminal was listed in AEMO's report as a future supply option capable of delivering up to 500 terajoules per day — about 130 petajoules a year — from 2026.
But it was not included in the formal modelling because it was considered a "proposed" project.
An AEMO spokesperson said it was not advanced to be included in the modelling as a committed or anticipated project.
Jemena, which owns and operates the Eastern Gas Pipeline linking Victoria and New South Wales, said the delay would not impact its work to reconfigure the pipeline for bi-directional flow — allowing gas to move south to Melbourne.
Squadron said its later start date did not mean it would miss the market window.
"We are in deep commercial discussions with a lot of very large customers to take the offtake and we're confident from 2027 on we will be able to sell the capacity of the facility," Mr Davis said.
He also said the delay was unlikely to benefit rival projects such as Santos' Narrabri gas field or Queensland pipeline expansions.
"Ultimately there are lots of projects vying to get financial investment decisions," he said.
"We are the only solution that has gone through FID [Financial Investment Decision], we've finished construction and commissioning.
Analysis from the Australia Institute shows about 80 per cent of Australia's gas is exported as LNG.
Independent Senator David Pocock has been critical of the policy settings.
"We don't have a gas supply shortage — we have a gas export problem," he said in March.
Mr Davis said the Port Kembla terminal, once operational, could help rebalance supply.
"There are capacity constraints between northern Queensland and the NSW–Victoria market," he said.
"You can't get much gas from the Northern Territory to the east coast, and you can't get any from WA — so Port Kembla Energy Terminal is a fantastic asset to facilitate those flows of Australian LNG."
A spokesperson for Energy Minister Chris Bowen said the federal government was made aware of the delay in March.
"The Albanese government has acted to secure gas supply out until 2029 — ensuring Australian homes and businesses have affordable supply when and where they need it," the said.
