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Australian Authorities Approve New LNG Project In Rare Move

The government of Queensland has approved the first large-scale natural gas project in almost a decade: the US$7.14-billion (A$10-billion) Surat LNG project led by a joint venture of Shell and China’s PetroChina, the Australian Financial Review reports.

There is no certainty the project will go ahead, however, as the companies have yet to make a final investment decision on Surat. If it does go ahead, however, it will produce some 5,000 petajoules of energy for the domestic and export market. The reserves covered by the Shell/PetroChina lease for the project contain an estimated 5 trillion cu ft of natural gas.

The chances of the project going ahead may be higher than a complete greenfield development since the joint venture, Arrow Energy, would use the existing infrastructure—pipelines and a gas processing plant—of another LNG project operated by Shell: Queensland Curtis LNG.

"This approach has two major benefits: it will get gas to the market faster and it significantly reduces the project footprint and the potential impact on local communities and the environment," the Queensland minister of mines said in a statement.

The approval of this project is important in light of Australia’s east coast problems with energy shortage. In fact, earlier this week consultancy EnergyQuest said Australia will need to start importing natural gas to avoid a shortage on the east coast by 2022.

The new Queensland LNG project is scheduled to begin production in 2020, but it would need pipelines if it is to be carried to the east coast of the country. The problem is particularly acute for New South Wales and Victoria, the EnergyQuest report said.

The gas shortage problem is not new. In fact, the federal government said it would impose export restrictions on LNG producers in the country in a bid to secure supply for the local market. However, this has evidently not been enough to change the situation.

By Irina Slav for Oilprice.com

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