Page 12 - AsianOil Week 47

AsianOil OCEANIA AsianOil

The department said that while the value of Offshore dive
projects in the publicly announced and feasibil- The department said that while exploration
ity stages of development that it considered likely expenditure remained close to decade lows
to reach FID had climbed by 8% to AUD102bn in 2019-2020 at AUD1.3bn ($958.2mn), a
($75.18bn), those in the possible category had 52% jump in onshore exploration expend-
fallen by 20% to AUD119bn ($87.71bn) and the iture had managed to offset the 27% drop in
value of those deemed unlikely had soared by offshore spending.
83% to AUD72bn ($53.07bn). The report blamed the collapse of interna-
With more than half of this potential invest- tional oil and gas prices in the first half of 2020
ment tied up in just 12 mega projects, disrup- as behind significant cost cutting, noting: “Off-
tions to just one or two could have serious shore exploration expenditure consequently fell
implications for the investment outlook of the to a two-decade low in 2019-2020”.
country’s commodity sector. The department added: “For the first time in
more than three decades, onshore exploration
FID delays expenditure was higher than offshore expendi-
The largest of these mega projects is Woodside ture in 2019-2020.”
Petroleum’s Browse to North West Shelf (NWS) This trend towards greater onshore invest-
project, which carries an estimated price tag of ment could well continue as the energy sec-
more than AUD30bn ($22.11bn). However, the tor’s focus shifts away from export markets and
project has seen its FID delayed from 2020 to 2023. towards meeting growing domestic demand. A
Moreover, FIDs for Santos’ Barossa gas predicted shortfall in supply by the middle of the
project, Royal Dutch Shell’s Crux project and decade has driven the government to unveil poli-
Woodside’s Scarborough to Pluto LNG pro- cies orientated around a “gas-led recovery”. Can-
ject have also been delayed from 2020 to 2021. berra has said it wants to unlock the potential of
Barossa is considered a likely backfill for Darwin five key basins – including the onshore Beetaloo,
LNG, while Crux is slated to be a backfill to the North Bowen and Galilee basins – in order to
Prelude floating LNG (FLNG) facility. boost supply and drive down prices.
The report said: “The proposed Pluto LNG Indeed, the federal government just this week
expansion (where a 5mn tonne per year [tpy] approved Santos’ Narrabri coal-bed methane
train would be added) is the only substantial (CBM) project in New South Wales, paving the
expansion to Australia’s LNG capacity currently way for a major new source of domestic gas supply.
in the investment pipeline.” The industry department said: “A tighter
These delays highlight a slowdown in the domestic gas market could support ongoing
flow of projects from the feasibility to committed growth in onshore petroleum exploration,
stage, with 19 gas and LNG projects still strug- with the Australian Energy Market Operator
gling to get off the drawing board. (AEMO) forecasting a possible shortfall of nat-
The department said: “The impact of ural gas on the Australian East coast market by
COVID-19 on oil and LNG prices has occurred 2024.”
against a backdrop of an existing global LNG This tightness is also expected to support the
supply glut, which has led to the deferral of FIDs development of several proposed LNG import
for several large offshore projects that were orig- terminals, with four of the five proposed termi-
inally expected in 2020 or 2021.” nals having reached the feasibility stage. “These
Offshore developers had already been tight- projects are aiming to start commercial opera-
ening their belts for a number of years, reaching tions by 2022 or 2023, in order to meet an antic-
a point in financial year 2019-2020 where capital ipated gas shortage on the East Coast market
expenditure in onshore projects overtook that in – although it is unlikely that all five projects will
offshore developments. go ahead,” the report added.™

P12 www. NEWSBASE .com Week 47 26•November•2020