Uncertain future for $50b in gas projects

Australian energy producers face heightened volatility for the next $50bn pipeline of gas projects, with major oil price shocks and shareholder pressure over carbon exposure complicating investment decisions, resources consultancy Wood Mackenzie has warned.

The Australian is reporting that nearly $20bn has been spent on writedowns and charges on Australian and Papua New Guinea projects run by Woodside Petroleum, Shell, Origin Energy and Oil Search in July as some of the nation’s biggest gas producers adjust to an uncertain outlook.

Crude prices have doubled from record lows in April to trade at $US43 a barrel, but even at those improved levels many projects remain marginal. Producers have responded by lowering their price assumptions, triggering giant writedowns of oil and gas assets, to reflect a collapsing demand outlook with COVID-19 continuing to roil the market.

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