Gas project deferrals a risk to economy

EnergyQuest says gas project deferrals and the reduction of capital expenditure recently announced by major oil and gas companies could be detrimental to Australia’s economy.

The Australian Pipeliner is reporting that in response to a slumping global oil price, a number of Australian producers have delayed final investment decisions on multi-billion dollar gas projects, including Woodside’s Burrup Hub initiative and Santos’ Barossa development.

In its latest report, analyst EnergyQuest said while certainly not desirable, Australian LNG exporters could survive the current oil price; however, the reduction in expenditure could prove to be a serious issue.

“The long-term problem is not being able to afford the gas field development necessary to keep LNG plants full,” said EnergyQuest.

“This is a global issue. The International Energy Agency estimates that global capital expenditure by exploration and production companies in 2020 will drop by about 32 per cent to US$335 billion ($530 billion), the lowest level for 13 years."

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