Enterprise Value/brl 2P reserves, page-7

AFR extract

Australian liquefied natural gas producers hoping to get new projects off the ground will have to wait years before they can find customers as global markets work through a glut of supply and higher-cost projects are pushed down the development queue, according to respected energy forecaster Fereidun Fesharaki.

Woodside Petroleum's Browse floating project, the Sunrise venture in the Timor Sea, and the ExxonMobil-led Scarborough project off Western Australia will all take longer than anticipated, as will most Canadian LNG projects, said Singapore-based Dr Fesharki, chairman of FACTS Global Energy.

"The Australian projects, there is room for them, but they will have to wait," Dr Fesharaki said, pointing to a need for more contracted supplies only in 2025 or later.

Woodside and its partners are nearing a decision within weeks to start detailed engineering and design work on their Browse floating project, and are targeting a final go-ahead for the venture by the end of 2016 with the aim of commencing production after 2020. But Dr Fesharaki said Browse wouldn't be able to proceed to a final investment decision without contracts with customers, which looked unlikely in the current market.

"There's no buyer: I don't see who is going to buy at any price," he told Fairfax Media from Singapore.

Similarly the proposed LNG projects in Canada will take longer, with a lack of demand the hurdle, not that low oil prices had made them uneconomic, Dr Fesharaki said, noting that Petronas' Pacific NorthWest LNG project, currently poised to get the go-ahead, would be an exception.

"There is a perception in the market that these projects aren't going ahead because of low prices, but if oil was at $US200 ($256), they still could not go forward – there is no demand," he said.

"Canada, Alaska, Browse, Sunrise – there is a need for all these projects but over an extended period of time."

MULTI-YEAR SURPLUS

Dr Fesharaki said that Papua New Guinea's proposed LNG projects would be an exception to the rule, with their much more favourable economics allowing them to compete against US export ventures in the 2021-25 period.

Both the Total-led Elk-Antelope LNG project and an expansion of ExxonMobil's PNG LNG venture would likely proceed, although probably still later than targeted, with PNG LNG train three possibly starting up in 2021 or 2022, and Elk-Antelope potentially in 2022, he said.