PERTH (miningweekly.com) – A continued low oil price could impact the earnings oil and gas major Origin Energy expects to receive from its investment in the Australia Pacific liquefied natural gas (APLNG) project.
In a shareholder review, MD Grant King noted that the company was actively and aggressively reviewing all aspects of Origin’s business and the funding thereof and would take "whatever steps necessary" to ensure that the company could continue to operate effectively in a sustained period of low oil prices.
As the upstream operator of the APLNG, Grant said Origin had initiatives in place to reduce the project’s operating and capital costs by $1-billion a year below costs experienced during the construction phase.
Of this, about $650-million had been achieved in the 2015 financial year with the remaining $350-million of cost reduction initiatives to be implemented by the end of the 2016 financial year.
“Completion of the APLNG project in the current financial year will be a major milestone in the development of your company. Upon completion, we believe Origin is well placed to deliver increasing value for shareholders in the years ahead,” Grant added.
The $24.7-billion APLNG project would comprise two processing trains each with a 4.5-million-tonne-a-year nameplate production capacity.
The upstream component of the project was 97% complete and the downstream component 92% complete as at the end of June. Sustainable LNG production from the first train had been targeted for the second quarter of 2016, with the second train to follow six months later.