Uncertainty around pricing and the future demand for gas will make investment decisions in projects such as the Newcastle Gas Import facility even more difficult, the head of the region's peak business body believes.
Energy Projects and Infrastructure Korea (EPIK) declared on Friday that the $589 million Newcastle gas project had become "economically unfeasible".
"Volatility of the international LNG market and high LNG benchmark pricing" had "placed a downward pressure on the economics of the project," the company said in a statement.
It previously described the Newcastle terminal its flagship project.
Business Hunter chief executive Bob Hawes said market volatility was wreaking havoc with energy projects.
"We need to recognise that neither Narrabri or an LNG import facility are over the line and the uncertainty in the market place around pricing and future demand characteristics will make investment decisions even harder," he said.
"The impact of the lack of certainty in supply will be felt by users and do nothing to assist the volatility we're experiencing right now."
"In the absence of securing definition around the projects that have the opportunity to supply more gas, we have to increase the pace and focus on matters over which there is more control, such as efficiency and looking at ways to transition industry from gas to other forms of renewable power, which will also assist the ambitions the state has to reduce carbon footprints."
EPIK launched the Newcastle Gas Import Terminal project in 2018 with the intention of supplying 80 per cent the NSW gas market. The terminal was declared critical state significant infrastructure in August 2019.
Other gas options for supplying the state's manufacturing sector include the Narrabri gas project and Andrew Forrest's delayed import plant at Port Kembla.
"It is disappointing to see that the region will not be getting the investment the EPIK project could have generated and from a state perspective, maybe this will give impetus to the proponents of the Port Kembla project, which will add to the supply of gas in the state network," Mr Hawes said.
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