Page 10 - GLNG Week 47 2020

GLNG COMMENTARY GLNG

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

P10 www. NEWSBASE .com Week 47 27•November•2020