Woodside 2011 Pluto LNG Estimate Cut 19% By JPMorgan on Threat of Strikes
Woodside Petroleum Ltd., Australia’s second-largest oil and gas producer, had an estimate of liquefied natural gas production at its Pluto venture cut 19 percent by JPMorgan Chase & Co., due to strikes at the project.
The A$13 billion ($11 billion) Pluto project in Western Australia state is expected to start in the second quarter of 2011 and may produce 2.5 million metric tons of LNG that year, Benjamin Wilson, an analyst at JPMorgan in Sydney, said in a report. His earlier forecast was for 3.1 million tons.
Woodside has asked Fair Work Australia, the country’s labor tribunal, to stop a strike that threatens to delay the Pluto venture, the Perth-based company said yesterday. The 12 crane drivers and forklift operators, employees of Dutch contractor Mammoet, began striking on April 28 seeking pay raises, it said.
The striking workers, paid about A$180,000 a year, may “create a significant bottleneck” for other contractors, JPMorgan’s Wilson said in the report dated yesterday.
Woodside reiterated yesterday that it is set to start LNG exports in early 2011, even though labor disputes have disrupted construction at the site in Karratha, about 1,600 kilometers (994 miles) north of Perth. While Pluto’s first exports are expected by the end of March, further strikes could affect the timeline and increase costs, the company said.
In February, Woodside said it implemented a “risk mitigation” plan to fulfill commitments to customers should strikes delay the venture, one of more than a dozen in Australia aimed at tapping rising Asian demand for cleaner-burning fuel. Woodside in November said Pluto costs would increase by as much as A$1.1 billion, partly because of higher labor expenses.
Pluto will be capable of producing 4.3 million tons of LNG a year once it ramps up output, according to Woodside’s website.
Woodside should be able to resolve the strike so that Pluto can begin in the second quarter of 2011, according to JPMorgan’s Wilson. The production schedule may be delayed further if Woodside’s application to Fair Work Australia fails, or if the company cannot settle the dispute, he wrote.
For Related News and Information: