ur money ur call, page-3

Let's just have a look at what has happened to the sector in the last 6 months:

- 2 projects received their federal environmental approvals - in terms of regulatory risk, the sector is derisked.
- Santos signs offtakes agreements, now totalling over $120 billion, and sells down more equity to customers
- 2 projects FIDed their projects
- heavy rains in QLD highlights the need for a diversity of supply for these major projects.
- ORG due to receive their federal environmental approvals in a few weeks.

Meanwhile, the expectation that there would be consolidation amongst the 4 major LNG projects hasn't happened. As such, there are FOUR projects rather than TWO competing for economies of scale. Add to that LNG's Fisherman's Landing Project, who has Chinese buyers/partners but no gas.

And ESG with the optionality to progress their own LNGN project, with land secured, with Japanese partners and access to cheap Japanese finance, to capture all of the value chain; OR, to sell into the competitive tensions in QLD.

Any way you look at it, the demand for gas is high, both in terms of the end Asian customers, and in terms of the LNG projects and their need for scale and diversity of supply.

And the number of large and uncontracted reserves are few and far between...

LOTS OF BUYERS, AND FEW SELLERS = HIGH PRICE.

Dare I say, 'a perfect storm'...?

Yep, seems like a perfect time for a downgrade! :)

Yaq