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Nexus Says Crux Australia Drilling May Show Floating LNG Need

Nexus Energy Ltd. (NXS), an Australian oil and gas explorer, said further exploration at the Crux field may justify the development of a floating liquefied natural gas project.

The company, together with Royal Dutch Shell Plc (RDSA) and Osaka Gas Co., next year plans to drill a well at the Auriga prospect, which may hold 1.4 trillion cubic feet of gas resources, said Chief Executive Officer Lucio Della Martina. Crux is located in the Browse Basin off western Australia.

“A successful outcome will provide substantial economic underpinning of the East Browse standalone FLNG case, which in Nexus’ view is the case with the highest value potential,” he told shareholders in Melbourne today.

Shell, which holds 80 percent of the project, so far plans to pipe the Crux gas to its nearby Prelude FLNG project. In Australia companies are examining plans to build as many as five floating vessels that will cool gas to liquid for transportation in tankers to clients.

Nexus is reviewing plans to sell part of its 17 percent stake in the project to reduce debt or even exit the venture.

“We have received an indication of interest in both a tranche of the asset and potentially in the entire Nexus stake,” Della Martina said. “Whilst the strategic intention is to divest a tranche of Crux, the board will consider the full range of divestment options provided these reflect the full value potential of the permit.”

In addition, Nexus has a 12-month option to sell 2 percent points from its stake in Crux to Shell for A$75 million ($78 million) before Oct. 22 next year, he said.

To contact the reporter on this story: Eduard Gismatullin in London at egismatullin@bloomberg.net

To contact the editor responsible for this story: Will Kennedy at wkennedy3@bloomberg.net

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