what do you think of lng?, page-9

H - besides the positive aspects listed, the LNG Ltd team have shown great tenacity and persistence to overcome some set-backs and the sort of entrepreneurial drive and innovative thinking required for a small company to mix it with larger and better resourced competitors.

Everything appears to be in place once gas supply is secured. They are battling here with the unfortunate cultural cringe of senior executives and directors that inhabit large companies by occupying cushy jobs. Too risky for their careers to suggest or back a local untried solution (such as LNG in this case) - much easier to go with the poven (though much more expensive) solution that they and their bosses are familiar with - eg Shell using old technology. I am confident that LNG Ltd will overcome this nonsense in the long run.

LNG Ltd has placed much store in MEL where they have acquired a blocking stake of ~10% at considerable expense. Strategically a good move as MEL seems to have adequate gas and if there is a takeover move on MEL then LNG could deal themselves into a gas supply agreement.

The only problem with this approach is the directors and management at MEL. They are just too slow and I imagine too hard to negotiate with. Some announcements and media suggests their Lions Way pipeline could take till 2016, 2017 and even 2019 to get approved and built. They don't have a good track record with getting anything up and running. Almost five years to get an approval for a mini power station. The MEL culture is a problem. A lot of time spent blaming the government for delays - can't imagine that encourages cooperation from the bureaucrats. Blokes that cut their teeth in large companies, now operating a small company with the same approach - doesn't work that well. There is hope however, as the CFO has left all of a sudden - which may make them a lot easier to work with in future. Maybe they will consider a farm-in now by LNG Ltd or its Chinese backers to speed things up.

LNG Ltd, however, by current media reports, needs gas to arrive at FL in Gladstone in advance of 1Q2015. So persistence with negotiating a GSA from MEL might supply LNG Ltd's 2nd 1.5 mtpa LNG train, but it won't help with the first.

There are other GSA prospects for LNG's 1st 1.5 mtpa LNG train at FL.

WCL/Mitsui is one that could supply about a quarter of the gas required. By some media reports, their domestic GSA with AGL runs out in 2104/2015. They are adjacent to an existing pipeline to Gladstone and close to FL.

Neighbour, Molopo, is trying to sell up. They could supply a third to a half of the gas required and their GSA probaly runs out in 2014/2015 as well. WCL & MPO both acquired their tenements and existing GSA's from Anglo Coal. LNG Ltd's Chinese backers might be prepared to buy Molopo's operation or help back neighbour WCL to buy it in exchange for a GSA.

By media reports, AGL has done a gas swap with QGC and is storing QGC's ramp-up gas in the Silver Springs Underground Gas Storage Project, which was acquired in the Mosaic Oil takeover, and has till about 2018 to supply the gas back to QGC who would have their Curtis Island LNG project operating by then. So maybe LNG Ltd can get gas supply from AGL for its first 1.5 mtpa LNG train, via Jemena's Wallumbilla to Callide pipeline, as SSUGSP is not far from Wallumbilla.

SXY & BPT may also be able to supply some gas from their Cooper/Eromanga Basin operations via existing pipelines.

Then other prosepects for a GSA would be the independent or farm-in parties to the existing big 3 Surat Basin operators who have made their FID's and plan to export from Curtis Island.

Looks like enough possibilities for LNG Ltd to get their first 1.5 mtpa train underway. Just the frustrating process of tying up deals with companies that probably enjoy stuffing LNG Ltd around.