Origin Studies LNG Opportunities Beyond Project in Australia

Origin Energy Ltd. (ORG) is studying new liquefied natural gas projects to provide its next stage of growth as its A$24.7 billion ($22 billion) development in Australia with ConocoPhillips is due to begin exports next year.

“One of the key questions for the company is where do we go with LNG?” Managing Director Grant King said today by phone from Sydney. “We’ve been doing some preliminary work about opportunities to take what we’ve learned in the LNG business and look at how we might grow that in the years ahead.”

Origin’s Australia Pacific LNG venture in Queensland state is one of seven export developments going ahead in the country to tap rising Asian demand for the fuel. The company is interested in geothermal and hydro power projects in nations such as Chile, as well as potential LNG options, King said.

“We are mindful that our capacity to invest and grow beyond 2017, 2018 is significant,” he said, adding that it’s too early to comment on specific LNG opportunities.

Origin also expects to reduce debt and return money to its shareholders through dividends after the Australian LNG venture starts bringing in cash, King said.

The project in Queensland will “deliver a step change” in the company’s earnings and cash flow from the 2016 financial year, the company said today as it reported a 5 percent increase in first-half underlying profit.

Origin dropped 2 percent today in Sydney trading to A$14.55, while the benchmark index rose 0.1 percent.

Arrow Energy Ltd., the gas producer owned by Royal Dutch Shell Plc and PetroChina Co., proposed building a fourth LNG export development in Queensland to follow projects being built by Origin, Santos Ltd. and BG Group Plc. Shell delayed its decision to go ahead with the project due to cost inflation in Australia, The Hague-based company said last year.

Origin and Arrow would benefit from collaborating, Bank of America Merrill Lynch said earlier this month.

“We’re happy to put to them the merits of working together,” King said. “You can assume we’ve done that. But it’s entirely in Arrow’s hands as to how they take it forward.”

To contact the reporter on this story: James Paton in Sydney at jpaton4@bloomberg.net

To contact the editor responsible for this story: Jason Rogers at jrogers73@bloomberg.net

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