Australia’s $200 Billion LNG Boom Waylaid by Covid and Cracks
James Thornhill Sep 05 2020, 3:30 AM Sep 07 2020, 9:24 AM
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(Bloomberg) — Cooks on strike and cracked equipment are among the latest maladies to undermine Australia’s $200 billion push to become the world’s biggest liquefied natural gas exporter.
More than a year after the completion of a decade-long LNG construction boom, two of the seven marquee projects haven’t been able to work right, the nation’s east coast urban centers face an impending gas shortage blamed partly on exports, and the government is receiving relatively meager tax revenues from fuel sales.
The setbacks are heating up a public debate between the pro-fossil fuel government and environmentalists over the role gas should play in the country’s virus recovery and energy future. Meanwhile the pandemic has cast doubt on long-term projections for the fuel and is causing billions in writedowns on the country’s once-vaunted gas assets. “The economics of gas have really turned upside down in short order to make some of those massive investments from 10 years ago already look like pretty poor decisions,” said Ebony Bennett, deputy director at the Australia Institute, a policy think-tank.
While Australia has been exporting LNG since the 1980s, the recent boom began in 2009 with Chevron Corp.’s final investment decision in Gorgon, and ended in 2019 when Royal Dutch Shell Plc shipped out the first cargo from Prelude — the world’s biggest floating LNG plant.
Prelude, floating 475 kilometers (295 miles) off the coast of northwest Australia, hasn’t shipped a cargo since January due to technical glitches. Adding to its problems, a labor dispute has seen service providers, including catering, take strike action in recent weeks.
“Prelude is a multi-decade project and its success will be measured by delivering sustained performance over the long-term,” a Shell spokeswoman said by email. The company has begun the process of hydrocarbon restart, she said Thursday, with timelines for a resumption of production and shipment to follow.
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Take Outages at Prelude and Gorgon could further dent revenue from Australia’s gas exports…
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