Santos’ update on the progress of its planned export LNG project in Queensland provides an early taste of what is to come in what will be a decisive year for the competing coal seam gas-fed projects at Gladstone.
With the big players – Santos and its partner Petronas, Origin Energy and its partner ConocoPhillips and BG Group – all pursuing multi-train developments, the race is on to sign up customers ahead of the flurry of final investment decisions that will need to be made at some stage this year. Santos and Petronas have said that their decision will be made in the middle of this year.
The timeframes are tight, with BG planning to bring its project on-stream in 2013, Santos and Petronas targeting 2014 and Origin and ConocoPhillips 2014-15. All the projects will need to lock in core customers this year, and probably by mid-year, if they are to stay on schedule.
The Gladstone projects are not just competing against themselves. There are a number of big new conventional LNG projects off Western Australia, the $US15 billion PNG LNG project has received final, albeit conditional, approval and has contracts for just about all its gas and there is also competition from other sources within the region, including expanded production from Qatar.
The abundance of prospective sources of supply may help explain why PetroChina walked away from a $US40 billion gas contract with Woodside last week because of delays in the development schedule of its Browse project (see Woodside's PetroChina export agreement expires, January 4).
While there has been a proliferation of new LNG projects, however, all the Gladstone projects, and indeed the other LNG projects in the region, cite the strong general growth in Asian demand for LNG and the planned quadrupling of China’s terminal capacity by 2020 in particular as reasons for being very bullish about the outlook for their projects.
The SMH also has a look at CSG LNG, with the focus on Origin Energy - Origin 'closes the gap' on LNG.
ORIGIN Energy's managing director, Grant King, says the company's $35 billion liquefied natural gas project is closing the gap on its more advanced rivals, and this is strengthening its bid to sign up a gas buyer.
The Asia-Pacific LNG project, a joint venture between Origin and ConocoPhillips, is widely seen as the laggard among the companies vying to export LNG from coal-seam gas in southern Queensland.
Analysts say its share price of $17.66 barely factors the massive earnings potential of APLNG, because unlike its key rivals BG and a Santos-Petronas joint-venture, Origin has not found a buyer for its LNG.
But, after letting drilling, engineering and construction contracts in recent weeks, Mr King said Origin's project was gaining ground. All the Queensland projects aim to start exporting gas by between 2014 and 2015.
''I think there is an increasing perception that our project is real and can deliver in that timeframe, and that's all that matters,'' Mr King said in an interview with BusinessDay. ''That's far more important in the buyer's eyes than being first, because each year buyers have needs for gas.''