$40 Billion LNG Project In Australia Cancelled Amid Low Prices, Charles Kennedy, Oilprice.com, Mar 24, 2016
The crash in LNG prices has claimed a major victim. Woodside Petroleum and its partners, which include Royal Dutch Shell, BP, and PetroChina have decided to cancel a massive LNG project in Australia because the economics no longer work.
…Citing the “extremely challenging” market, the project was scrapped on March 22. “It’s very, very difficult for us to invest in this price environment,” Woodside’s CEO Peter Coleman said.
“We’ve got a glut of LNG at the moment and a large number of potential projects out there,” Neil Beveridge, a Hong Kong-based analyst at Sanford C. Bernstein & Co., told Bloomberg in an interview.
…with LNG prices a fraction of what they once were, the decision does not come as a surprise. A handful of other large LNG export facilities that have been planned for Australia are also getting second looks. Browse had failed to secure any customers for its planned capacity, and with LNG prices now down to multiyear lows, it would be much more difficult for this project to turn a profit than for some competing projects that sealed contracts years ago.
The forces of no, or market economics?
ADDENDUM, FROM READER:
We’re so lucky in BC. Aren’t we?
As to the libs’ staunch resistance to prudent counsel, advice they don’t want to hear?
Their logic is dazzling. If a project is made Too Big it can’t be allowed to fail. To guarantee inevitable success just make sure every project is Too Big to back away from.
There is one concept that pound foolish ideologues like Princess Enron, Stephen Harper, and his newly transferred acolytes are anxious to disinvent.
The fact of Business Risk
“The probability of loss inherent in an organization’s operations and environment (such as competition and adverse economic conditions) that may impair its ability to provide returns on investment. Business risk plus the financial risk arising from use of debt (borrowed capital and/or trade credit) equal total corporate risk.”
Despite proof after proof of losses – worldwide – how could the insistence upon further massive LNG investment now be anything less than a catastrophic error?
The typical the BC response? Confidence, “We’re Not Worried”.
Though it makes entertaining if financially absurd theatre, unfortunately for BC taxpayers, political grandstanding is irrelevant. It offers zero leverage and has no bearing on whether this effort will be seen later as either a brilliant initiative or a barking mad Ponzi scheme.
The argument that pushing massive projects like Site C still is “necessary” [says who? what are the facts?] and the belief that all those other LNG fantasies ever were invaluable to taxpayers now looks more like attempts to pretend that the risk of such investments failing simply doesn’t matter.
Like a sinking Titanic the bridge believes it can all be managed. Just Remain Calm.
To the passengers paying for this ride and noting the degree to which the ship is sinking this is one more resource exploitation managed by people with a ministerial track record of zero organizational genius and astonishing contempt for real oversight.
Reliance on PR to mask a non-stop string of failures to perceive economic and social reality? That’s just Politics…As usual, devoid of ministerial responsibility.
While other nations are shutting down mass expenditure plans, in China, Japan, South Korea, the US and elsewhere, the risk of failure increases for those still determined to make reality subordinate to ideology. An ideology which opposes realigning expenditures to suit reality looks more and more madcap and incompetent. Alice’s Tea Party.
We’re so lucky in BC. Aren’t we?