In order to advert a project blowout of 1 year, for a project with a capital cost of $16 billion dollars, at 8%, the cost is $1,28 billion dollars just in interest.
$1.28 billion. That is almost twice ESG's current mcap.
An acquisition of extra gas that averts such a project delay would save a QLD project over 1 billion dollars. That is without even considering the additional benefits.
Or, would these projects like to rely on buying gas from small third parties they do not control? A $16 billion project, relying on the field development of juniors to meet their project timetables?
Extra gas for a third train, diversity of supply, 'insurance', avoiding costly project delays, extra gas flows during ramp up, 'supply point flexibility' ... not hard to see how strategically valuable uncontracted resources and reserves like ESG are.
Or, ESG can SELL extra gas to the QLD projects come 2015. I wonder what the price per GJ would be come 2015? when it is apparent that the front-end is on schedule but the gas field development cannot support the front-end..?
But, the big projects like BG and Shell would never let themselves get in that situation. They will have to secure large gas resources and reserves well before then. If for no other reason than to make sure these acquisitions are developed enough to support the shortfall come 2015/2016.
And then just imagine if it rains, AGAIN! lol
Yaq
ESG Price at posting:
71.5¢ Sentiment: Buy Disclosure: Held
