https://www.miningweekly.com
Coal|electrification|Energy|Environment|Export|Gas|Industrial|Innovation|LNG|Measurement|Petroleum|PROJECT|Projects|Storage|Contracting|Infrastructure
Coal|electrification|Energy|Environment|Export|Gas|Industrial|Innovation|LNG|Measurement|Petroleum|PROJECT|Projects|Storage|Contracting|Infrastructure
coal|electrification|energy|environment|export|gas|industrial|innovation|lng|measurement|petroleum|project|projects|storage|contracting|infrastructure

A$11bn of LNG projects waiting in the wings - WoodMac

10th December 2020

     

Font size: - +

PERTH (miningweekly.com) – Some $11-billion worth of gas projects were poised for a final investment decision (FID) in Australia in 2021, new data by analyst Wood Mackenzie (WoodMac) has shown.

With liquefied natural gas (LNG) backfill as the focus, these projects include three upstream FIDs; Mitsui’s Waitsia, Santos’ Barossa and Woodside’s Scarborough, and Australian Industrial Energy’s (AIE’s) Port Kembla LNG import terminal which will supply the East Coast market. 

“After doing everything possible to tighten belts this year, Australian operators will open their wallets and start spending. The backlog of FIDs will begin to clear as a fresh round of projects are sanctioned. But for this to occur, there has to be continuing improvement in the macro-environment and prices trending up,” said WoodMac senior analyst Daniel Toleman.

The first cab off the rank is expected to be Waitsia, located in the Perth basin. The project will export LNG from the North West Shelf with production starting in late 2023.

Major Santos is expected to sanction the Barossa gas project late in the second quarter, despite its new carbon targets and the gas’ high carbon content.  

Woodside is likely to sanction the Scarborough to Pluto project, with Toleman saying that the lean Scarborough gas suited a new expansion train and Woodside can control the pace of a Pluto train 2 development.  

“Woodside will sanction the project without contracting any additional LNG, taking on exposure to the spot LNG price. This is a bold strategy which allows them to take advantage of strengthening near-term market fundamentals.” 

WoodMac also expects AIE to sanction the Port Kembla import terminal to supply the east coast market. With formal FID expected in the first quarter of 2021, the facility will operate on a toll basis with gas buyers reserving capacity. 

Toleman said that LNG imports would become the marginal cost of supply and domestic prices would rise as they move towards global LNG prices, including the cost of regasification. This was positive news for upstream players with un-contracted gas, he added.

While corporate spending could see an uptick, signs are less clear in the merger and acquisition market. WoodMac expects at least one significant LNG or infrastructure asset to change hands. However, many assets would remain on the market as the bid-ask spread cannot be closed and buyers struggle to move past the abandonment liabilities and complicated joint ventures.

Key drivers for selling include deleveraging balance sheets, rationalising portfolios and preparing for the energy transition, Toleman said.

As international oil companies and the majors exit the market, there will be opportunities for local players to take up bigger roles in the country’s upstream industry.  

“Notably, Australian small caps could take centre stage in 2021. Strike Energy could sanction the first phase of the West Erregulla project supplying the Western Australian domestic market. Three companies - Galilee Energy, Central Petroleum and Comet Ridgem - are pursuing FIDs on coal seam gas projects in Queensland. WoodMac believes at least one will be sanctioned next year,” said Toleman.

“If there is anything set for 2021, it is the energy transition story and how Australia will play a leading role. Central to this will be revision of plans for new and existing developments. Electrification, carbon capture and storage (CCS) and batteries will be the preferred options to reduce carbon emissions. 

“However, the key is whether regulation can keep up with innovation and we think this is unlikely in 2021. As a result, we believe Santos’ Moomba CCS project, will not be sanctioned next year despite it being FID-ready and economically attractive. For the project to go ahead, Santos must ensure carbon credits can be assigned to re-injected CO2, allowing future emissions to be offset.”  

Toleman said that carbon-neutral LNG cargoes will also be in the spotlight, however, he noted that a standardised definition of a carbon-neutral cargo is yet to be determined.  

“In 2021, look for steps towards increased transparency and consistent emissions measurement, and carbon regulation advancing in Australia.” 

 

Edited by Creamer Media Reporter

Comments

Showroom

SABAT
SABAT

From batteries for boats and jet skis, to batteries for cars and quad bikes, SABAT Batteries has positioned itself as the lifestyle battery of...

VISIT SHOWROOM 
Victaulic
Victaulic

Since 1919, Victaulic’s innovative solutions and design services continue to increase construction productivity and reduce risk, ensuring projects...

VISIT SHOWROOM 

Latest Multimedia

sponsored by

Option 1 (equivalent of R125 a month):

Receive a weekly copy of Creamer Media's Engineering News & Mining Weekly magazine
(print copy for those in South Africa and e-magazine for those outside of South Africa)
Receive daily email newsletters
Access to full search results
Access archive of magazine back copies
Access to Projects in Progress
Access to ONE Research Report of your choice in PDF format

Option 2 (equivalent of R375 a month):

All benefits from Option 1
PLUS
Access to Creamer Media's Research Channel Africa for ALL Research Reports, in PDF format, on various industrial and mining sectors including Electricity; Water; Energy Transition; Hydrogen; Roads, Rail and Ports; Coal; Gold; Platinum; Battery Metals; etc.

Already a subscriber?

Forgotten your password?

MAGAZINE & ONLINE

SUBSCRIBE

RESEARCH CHANNEL AFRICA

SUBSCRIBE

CORPORATE PACKAGES

CLICK FOR A QUOTATION







sq:0.361 0.415s - 109pq - 2rq
1:
1: United States
Subscribe Now
2: United States
2: