Page 12 - AsianOil Week 33

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WA ringfences onshore gas projects

POLICY THE Western Australia government has at the Karratha Gas Plant and export some of its
announced plans to prevent the sale of future production as liquefied natural gas (LNG) “for a
onshore natural gas projects, barring a single short period of time”. This was, he said, because
project, to East Coast or overseas buyers. of the exceptional economic circumstances cre-
The move effectively scuttles the controversial ated by the COVID-19 pandemic.
transnational pipeline running from Western “The Waitsia Gas Project Stage 2 in the Mid
Australia that the National COVID-19 Commis- West is an exception to the policy. Once sanc-
sion Advisory Board (NNC) has recommended tioned, it will provide urgently needed jobs, roy-
to the federal government as worthy of support. alties and economic stimulus for the region and
WA Premier Mark McGowan said on August the state,” he said.
17 that he wanted to avoid a repeat of the market Waitsia, considered to be one of the country’s
volatility currently being experience on the east largest onshore discoveries in the last four dec-
coast. “Western Australia’s domestic gas policy ades, is estimated to produce 1.5mn tonnes per
is the envy of the nation, and the updated policy year of LNG over seven years.
will ensure our state can continue to access relia- Traditional offshore LNG projects, which
ble and affordable gas,” he said. are already required to ring fence 15% of their
The Waitsia project was the only onshore feedstock production the local market, will
development to receive an exemption. Japan’s not be affected by the changes. McGowan
Mitsui and Co. and Beach Energy are develop- added: “For the domestic gas policy to work,
ing the gas field via a joint venture and are still the market also needs to know how much gas
to reach a final investment decision (FID) on the is available to it, and when the gas is availa-
project. ble. We’ve listened to WA industry’s calls for
McGowan said his government had given this transparency and the amended policy will
in-principle support to allow Waitsia fill capacity ensure it happens.”™

Woodside to expand

stake in Senegal project

FINANCE & AUSTRALIAN developer Woodside Petroleum 20% reserved for state GEPetrol), as well as
INVESTMENT has exercised pre-emptive right to acquire 40% the Etinde project on Cameroon’s offshore
stake in the Rufisque, Sangomar and Sangomar shelf (37.5% stake).
Deep (RSSD) project in Senegal. “After the planned acquisition was
The move blocks Russian oil major Lukoil’s announced by Lukoil in late July, we had
$400mn bid for Cairn Energy’s stake. Woodside written that the RSSD project looked to be
had flagged up in recent weeks that might seek to an interesting investment opportunity at
block the bid and now that it has the Australian a fairly low initial cost – and the fact that
firm’s stake will expand to 75%. Woodside exercised its pre-emptive rights
Kommersant reported on August 17 that supports our view,” Sberbank CIB com-
Lukoil was finding it challenging to expand its mented on August 18.
resource base in Russia, as offshore and strategic For Lukoil, the fact that it will not enter
oilfields were reserved for state-run majors Ros- the project now means lower risks for
neft and Gazprom. dividends in the medium term, the bank
However, Woodside had expressed concern believes, observing that the development
recently that allowing Lukoil to join the RSSD of the Sangomar field alone could have
development would open up the rest of the con- required a substantial capital investment
sortium to US sanctions. outlay from Lukoil of $1.7bn over 2020-
Most recently, Lukoil acquired 25% in 2023 (over $400mn per year on average).
Congo-based Marine XII for $768mn, 5% in VTB Capital (VTBC), in turn, suggested
UAE-based Ghasha, and in 2019 increased its on August 18 that in the absence of large-scale
stake in Nigerian extraction Block 132 from acquisitions, Lukoil might be more willing to
18% to 40%. increase the shareholder return.
The Russian company is also eyeing par- Still, VTBC does not expect a tangible mar-
ticipation in the EG-27 extraction block in ket reaction to the news, with Lukoil’s share price
Equatorial Guinea (80% stake possible with showing no immediate reaction.™

P12 www. NEWSBASE .com Week 33 20•August•2020