Business

Oil price too low to see return for Origin Energy plant

AUSTRALIA Pacific LNG's first shipment of liquefied natural gas on Saturday was exported into a market where the low oil prices mean Origin Energy won't even cover the operational and financing costs for the plant.

According to Origin's 2015 annual report, the company requires the oil price to be around $55 a barrel to receive a cash flow distribution from APLNG but the prices finished below that on Friday at $47.29.

If oil is at $100 a barrel, Origin expects to make $900 million in cash flow per year but with each drop of $10 that amount decreases by $200 million.

And the price continued to drop this week, finishing below $45 a barrel on Monday.

Origin Energy managing director Grant King was still positive when announcing the first shipment from APLNG though.

"This is a landmark moment in the history of Origin," he said as the project that cost the company $25 million and seven years to build exported gas for the first time.

"LNG plants have a long operational life and (APLNG) is expected to deliver a significant amount of earnings to Origin," he said.

In a move to protect the company from any potential further price drop, in December Origin brokered a deal for 2017 LNG shipments at a fixed price.

That is to sell 75% of shipments at $55 a barrel and the rest at $40 a barrel which would still see the company operating at a loss but does reduce risk.

"With the continued decline in oil prices, Origin has acted to reduce the potential requirement for the company to make additional contributions to (APLNG)," Mr King said.

He said if oil prices were at $28 a barrel the company would have to contribute around $200 million to APLNG.

Topics:  gladstone lng



How to survive a bushfire in your car

IT SOUNDS like a nightmare, but it can happen.

Eight reasons to join the RFS

SPREAD across 93% of Queensland, the Rural Fire Service has about 36,000 volunteers. And you could be one of them.

What if my insurer gives me grief?

CLAIMING your insurance cover after a natural disaster can go one of two ways. It can be a breeze, or like pulling teeth.

Elderly men charged over alleged pot bust

SUSPECTS CHARGED: Police allegedly found three men 'tending' to cannabis plants when they raided a rural property at Ambrose.

Two men in their sixties have been charged by police after raid.

Top 10 cheapest houses on the market in the Gladstone region

98 Dalrymple Drive Toolooa

A LIST of Gladstone's best, cheapest houses

'He can see!' Mum's tears as boy fights Taipan bite

Eli Campbell, 2, is recovering at Brisbane's Lady Cilento Children's Hospital after he was bitten by a taipan three times at Agnes Water.

Todder bitten by a snake can now see, talk and walk.

Local Partners

Jennifer Lawrence gives keys to new partner

Oscar winner Jennifer Lawrence

Oscar winner settling down with new partner

Rogue One star proud to lead new Star Wars film

Felicity Jones leads the new Star Wars film

Star Wars lead proud to be in front in sci-fi

What's on the small screen this week

Ernie Dingo stars in the TV series Going Places with Ernie Dingo.

ERNIE Dingo stars in a new travel series and Seven airs the AACTAs.

Mandy Moore feels like she's 60

Mandy Moore sees herself as a 60-year-old rather than a 32-year-old

Goooodbye Hamish and Andy (from our radios)

Hamish and Andy

The pair have been on air since 2006

David Attenborough on facing his mortality

Sir David Attenborough in a scene from the TV special The Death of the Oceans.

Life without Sir David Attenborough is hard to imagine

Chinese locked out of Australian property market

The rules are different if you're a foreigner

The buyer was from China - the trouble started right there

Morrison signs off on new affordable rental model

Australia's Treasurer Scott Morrison speaks during a press conference after a meeting of the Council of Federal Financial Relations at Parliament House in Canberra, Friday, Dec. 2, 2016.

Scott Morrison signed off on development of a new financing model

Family scoop bargain $160K 'holiday home' in Gladstone

BARGAIN: A Biloela family has purchased 21 Ann St for $160,000. They try to get to Gladstone at least once a month.

ADVERTISED as "renovate or demolish", but snapped up for getaway.

REVEALED: Gladstone property prices hit lowest in downturn

Aerial View overlooking Kin Kora residential area, Gladstone.



Photo Brenda Strong / The Observer

GLADSTONE PROPERTY prices have hit their lowest since the bust.

Coast high-flyer's fight back from bankruptcy, $72m debt

Scott Juniper went from millionaire developer to declaring bankruptcy in2012, now he is back on top of his game again with new developments including this one in Coolum.

'Apocalyptic lending storm' causes financial collapse.

Ready to SELL your property?

Post Your Ad Here!