A new project will see gas flow to Shell-operated QGC to be sold locally and exported through its plant on Curtis Island.
A new project will see gas flow to Shell-operated QGC to be sold locally and exported through its plant on Curtis Island.

Green light for gas project amid global uncertainty

PREDICTIONS that liquefied natural gas export revenue could drop by as much as $20 billion have not stopped a major gas project with direct links to Gladstone going ahead.

Shell Australia and Arrow Energy have backed the first phase of the Surat Gas Project, which is expected to deliver up to 2.5 billion cubic metres of gas a year to the domestic and export market.

The gas will flow to Shell-operated QGC to be sold locally and exported through its plant on Curtis Island.

Yesterday Shell made the final investment decision and construction will begin this year, with first gas sales expected next year.

A report released by consultancy Energy­Quest this week said Australian LNG export revenue for 2019-20 would be similar to the previous financial year - about $50 billion.

It expected the full impact of lower oil prices to be felt next financial year, when it could be as low as $30 billion.

According to the Australian Bureau of Statistics, export contract prices for LNG are influenced by the international crude oil price with a four to six-month lag.

"The utilisation of QGC's existing upstream pipelines and treatment facilities enables Arrow to significantly reduce development costs, making the project competitive and economically attractive," said Maarten Wetselaar, integrated gas and new energies director at Shell.

Arrow CEO Cecile Wake said the decision showed confidence in Queensland and the Australian market against a backdrop of sustained low oil prices.

In more good news for Gladstone, LNG exports are doing better than expected.

The EnergyQuest report notes trade with China and Japan appears to be returning to normal, particularly shipments from Gladstone.

There were 16 cargoes delivered in March compared to 14 in February and 17 a year ago.

"After seeing 12 Australian cargoes destined for China delayed or diverted in February, cargoes were back on track during March with no delays or diversions seen," it said.

At current oil prices, EnergyQuest said LNG exporters "will not thrive but they will survive".

"The long-term problem is not being able to afford the gasfield development necessary to keep LNG plants full," it said.

"Between 2009 and 2015 the oil and gas industry spent $273 billion on development projects, mostly LNG."

The report said a surge in oil and gas investment was unlikely until oil prices improved.

It said the International Energy Agency estimated global capital expenditure by exploration and production companies in 2020 would drop by about 32 per cent to $US335 billion, the lowest level for 13 years.



CASH SPLASH: Tannum set for aquatic centre development

premium_icon CASH SPLASH: Tannum set for aquatic centre development

The Boyne Island and Tannum Sands region’s prayers for an aquatic facility took a...

Modern technology added to one of region’s oldest cemeteries

premium_icon Modern technology added to one of region’s oldest cemeteries

ONE of the region’s oldest cemeteries will undergo modernisation.

Stockland launches out of COVID-19 with new content

premium_icon Stockland launches out of COVID-19 with new content

Stockland has exciting new interactive opportunities for Gladstone region locals...