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($4.64bn). The spending cuts were revealed at contracts, meaning that while prices will be bet-
the same time the company reported a 68% year- ter than the spot market, they will still be worth
on-year collapse in its first-quarter net profit to less than this time last year owing to oil price
MYR4.5bn ($1.03bn). indexation.
With the international gas market tanking, The sustained pressure on the LNG market
the region’s largest gas exporter – Australia – has has reportedly encouraged Royal Dutch Shell to
begun turning its attention to ways it can prop up consider the sale of a stake in the common facil-
domestic producers. ities at its Queensland Curtis LNG (QCLNG)
plant.
Domestic focus “Royal Dutch Shell is considering a sale of a
Australian Energy Minister Angus Taylor said 26.25% interest in the QCLNG common facili-
last week that it was essential for the country to ties – a multi-billion dollar investment opportu-
lean on gas-fired power generation as it transi- nity,” Reuters quoted a sale flyer as saying. The
tions to a greener economy. newswire quoted unnamed industry sources as
Taylor’s comments came following an update saying the stake could sell for $2-3bn.
to the Australian Energy Statistics, which showed Shell owns a majority stake in the QCLNG
that renewable energy sources accounted for plant, but wholly owns the common facilities
21% of the country’s power generation in 2019. that include two LNG storage tanks, water, fuel
Gas-fired power generation represented 20.5% and power systems, a jetty and terminals.
of the national total.
Taylor said: “Gas is flexible and provides the What next
dispatchable capacity we increasingly need to Global LNG demand must first bounce back
balance intermittent renewables and deliver a to pre-COVID-19 levels before the process of
secure, reliable and affordable electricity system soaking up additional supply can begin. It is still
to power our homes, businesses and industries.” unclear how that process will unfold, with the
He added: “This has never been more impor- International Monetary Fund (IMF) warning
tant – particularly as we begin our recovery from recently that its April forecast of a 3% contrac-
the impact of the COVID-19 pandemic. This is tion in the global economy is looking increas-
why the Australian government believes a gas- ingly optimistic.
fired recovery will drive jobs and economic As it stands, the IMF expects the global econ-
growth.” omy to partially bounce back in 2021, with a
To this end, he encouraged state and terri- predicted growth of 5.8%. The body said: “The
tory governments to do more to help developers cumulative loss to global GDP over 2020 and
bring fields into production. 2021 from the pandemic crisis could be around
His comments come at a tough time for the 9 trillion dollars, greater than the economies of
country’s LNG sector. In the wake of the oil price Japan and Germany combined.”
crash and the pandemic’s demand destruc- Much depends on the global response to a
tion, the country’s biggest developers have second wave of infections, which will come as
deferred several major export orientated pro- quarantine conditions are relaxed. If major econ-
jects. Woodside Petroleum has deferred FIDs omies embrace a second lockdown the economic
on the Scarborough, Pluto Train 2 and Browse impact will far surpass current projections based
LNG projects, while Santos has pushed the Dar- on a single wave of social distancing restrictions.
win LNG back-fill Barossa development to the Indeed, LNG may not recover to pre-COVID-19
backburner. levels until well into 2022.
Australia’s LNG shipments climbed 3% y/y This will lead to a prolonged LNG price
in April to 6.9mn tonnes, or 101 cargoes, local slump and even less motivation to develop
consultancy EnergyQuest said in May. The car- projects beyond the scope of meeting contrac-
goes are likely to be part of long-term supply tual obligations.™

Week 22 04•June•2020 www. NEWSBASE .com P5