From The Australian:
Arrow Energy, the Queensland joint venture between oil giants Shell and PetroChina, has taken a $700 million writedown on its coal-seam gas project and revealed it shed nearly 500 jobs, or 40 per cent of its workforce, in the past year.
The writedown makes Arrow the third big CSG project to take an impairment this year, following BG Group’s writedown of the Queensland Curtis LNG project because of the sliding oil price and a Santos writedown of its controversial NSW coal-seam gas assets because of reserve downgrades.
This throws up two big questions. With Shell now taking control of British Gas and QCLNG, there appears to be no push to develop Arrow resources as feedstock for it or any other Curtis Island project. That’s another capex blow for Australia but also means all projects will sink or swim on their own gas sources (with implications for higher gas prices for everyone else).
Second and associated, when are Santos and Origin going to get to the writedowns? GCLNG and Arrow have written off billions. At some point the other two projects will have to do the same. While current management might be protected, their balance sheets are bloated and big earnings shocks only a matter of time.
I have to say that markets are very forgiving of such things.
