Australian LNG Projects Worth A$100 Billion Await Decisions
Exxon Mobil Corp. (XOM)’s liquefied natural gas venture in Australia is among four projects that may make final decisions in the next 18 months on investments totaling about A$100 billion ($104.3 billion).
Final determinations are expected for Woodside Petroleum Ltd. (WPL)’s Browse and Sunrise projects, Exxon Mobil’s and BHP Billiton Ltd. (BHP)’s Scarborough gas field and Hess Corp. (HES)’s Equus project, Martin Ferguson, Australia’s natural resources minister, said in a Sept. 21 interview in Tokyo.
“Our job as a government is to nurture a regulatory regime that continues to attract investment, to reduce the time and cost of environmental approvals and to make sure Australia continues to remain attractive for investment,” Ferguson said.
Australian LNG projects may face increased competition from terminals planned in North America and southeast Africa. Buyers in Asia are pushing for pricing formulas that could make gas cheaper than the long-term oil-linked contracts traditionally offered by suppliers in Australia, which depend on Japan for most of their sales.
Ferguson didn’t mention Royal Dutch Shell Plc (RDSA) and PetroChina Co. (857)’s Arrow Energy Ltd. among those expected to announce investment decisions within 18 months. Arrow reiterated in March that it planned to decide in late 2013 whether to develop an LNG export project on Queensland state’s Curtis Island. Deutsche Bank AG estimates the venture may cost more than $20 billion.
Woodside and its partners in the proposed Browse LNG venture are due to decide in the first half of 2013 whether to go ahead with a plant in the Kimberley region of Western Australia. The project may cost A$44 billion, Deutsche Bank said.
The development, approved in July by the environmental regulator of Western Australia, also needs clearance from the federal governments. Mitsubishi Corp. (8058) and Mitsui & Co. agreed in May to buy a 14.7 percent stake in Browse for $2 billion, acquiring about 1.5 million metric tons of LNG a year.
“The expectation is that Browse will” reach a final investment decision within 18 months, Ferguson said.
Woodside is also talking with the government of East Timor to resolve a dispute that has stalled the development of the Sunrise gas field, which straddles a boundary between Australian waters and an area jointly managed by the two countries, Woodside said in July.
East Timor, which became a sovereign state in 2002 and depends heavily on oil and gas revenue, has said it wants the gas piped to an LNG plant built on its soil. Woodside favors using a barge-based floating LNG plant for Sunrise, saying it would deliver the most revenue to both countries.
BHP and Exxon Mobil are also considering a floating LNG plant to process gas from their Scarborough field off Western Australia, Mike Yeager, chief executive officer of BHP’s petroleum unit, told reporters in May. The floating platforms would eliminate the need to build pipelines and jetties, he said.
Hess plans to send from its Equus development off Western Australia to Woodside’s Pluto LNG venture, Chevron Corp. (CVX)’s Wheatstone LNG project or the Woodside-led North West Shelf project, the U.S. oil company said in March.
“They’re the projects I’ve got in my mind with potential final investment decisions over the next 12 to 18 months,” Ferguson said.
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