An unlikely heading in a recent ABC news feed “Green shoots pop-up in the global economy as China keeps pumping” masked a section “Thermal coal and LNG prices crash”.
https://www.abc.net.au/news/2019-04...lobal-economy-as-china-keeps-pumping/10972450
Extract
“Thermal coal's closest competitor into Asian power generation, LNG, has seen its spot price crash 60 per cent in little more than 6 months.
While PMIs are telling one story in Asia, perhaps energy demand has an entirely different and worrying narrative.”
View attachment 1508521
The Wallumbilla Benchmark price however appears to be unaffected.
View attachment 1508524
Angela Macdonald-Smith whom I have great respect for wrote a recent article entitled
LNG import projects face delays as investors ponder Labor gas policy
Extract
“Construction of LNG import terminals in Victoria and NSW is looking increasingly less likely to begin this year as delays in government approvals and fears of how unions might influence Labor government policy raise doubts over their business cases.”
Political uncertainty could work in CTP’s favor by delaying say 250TJ/day of imported gas being fed into the system at Crib Point.
https://www.copyright link/business/energy/gas/lng-import-projects-face-delays-as-investors-ponder-labor-gas-policy-20190204-h1atpx
This article (Updated 2010) lists the current LNG Current and potential LNG sale and purchase agreements (SPAs) with China
which are typically in the 15-25 year range and were signed between 2004 & 2009.
https://www.aph.gov.au/About_Parlia..._id=4BA6F23AEFCA4EC688372C6D2BFF6269&_z=z
Another article by GHD in 2016 gives an interesting overview of the opportunities (For CTP) arising from the NGP.
http://www.mitez.com.au/wordpress/wp-content/uploads/Northern-Gas-Pipeline-Opportunity-and-Impact-Study.pdf
My thoughts
- Now the NGP is up and running at near capacity it looks like Jemena have made it just the right size at 90 TJ/day to supply the actual molecules to the Diamantina power station at Mount Isa, Phosphate Hill and Cannington mine.
- No wonder APA did a good deal with IPL on “Haulage” to Gibson Island, they have saved themselves haulage on the gas molecules to (Their) Mount Isa power station!
- I can see why CTP are targeting Mount Isa as a market and since APA own the supply pipelines & Diamantina Power Station they could be possibly persuaded to buy their gas off CTP if it was attractively priced.
- Since the NGP is pretty full and the CTP Half Share of Mereenie looks healthy, it looks like MAC have sold most or all of their share of Mereenie gas.
This is good because I would have been concerned if they had a problem with gas sales.
- I regarded the FID in the Crib Point import terminal as a leading commercial indicator on the relationship between imported and local gas prices but this appears to be influenced partially by political uncertainty.
- The Export LNG price collapse may be a combination, amongst other things, of a warm Northern winter & tactics in relation to the US tariff negotiations.
- In any case, if CTP can manage to get a target price of say $5.50 at the site gate my modelling indicates that they will be able to amortise debt at a reasonable rate during the present reserve life time and have some cash left over for development.
- Looking at things in a positive light, although there would be a long path to monetisation of a successful initial Dukas drilling result, even a moderate outcome would help in refinancing the business.
Regards
OGP
Apologies Ash f& Justin or the name mix up.
