Shell announced a large profit downgrade Friday with several implications for its Australian businesses. It appears Arrow energy is evaporating as quickly as LNG in the sun. From the Courier Mail:
ARROW Energy is expected to announce a series of redundancies from this week as the group winds back its commitment to the $10 billion Gladstone LNG project at Curtis Island.
It is understood that managers will be travelling to regional areas such as Moranbah and Dalby early in the week to begin what is expected to be up to 400 redundancies throughout the gas group from a total staff of 1200.
..it appears Arrow is poised to become the first casualty of the runaway Gladstone LNG boom with speculation it will not proceed with plans to build a $10 billion fourth LNG train on Curtis Island and will down size its Australian operation with significant job losses.
…Several weeks ago Arrow let about 60 full-time in-house contractors go and cancelled their graduate program.
Cleaning contractors have been told the numbers of floors at the head office at 111 Eagle St to be cleaned will be reduced from 10 to five, less than 10 months after staff moved in following a $30 million fit out and signing of a 10-year $200 million lease.
Perhaps no surprise to MB readers but it will be nice chunk out of some optimistic analyst’s assessment of likely capex approvals.
Refining is also set for a hit. From the SMH:
Suitors for Shell’s Geelong refinery have been reminded of the extremely challenging nature of the business, with the global oil giant revealing that conditions for the downstream industry have worsened over the past year.
…”Compared with the fourth quarter 2012, downstream earnings, excluding identified items, were mainly impacted by significantly weaker industry refining conditions, in particular in Asia Pacific and Europe,” the company said in a statement.
…Swiss group Gunvor, Dutch energy trader Vitol and private equity firm TPG are believed to be circling the sale of Shell’s downstream assets in Australia, according to recent reports in The Australian Financial Review.
The downstream division includes a network of petrol stations as well as the Geelong refinery.
Shell has said it will convert Geelong into a fuel import terminal if a buyer cannot be found by the end of 2014. That outcome would likely see dramatically fewer people employed on site than the 500 that currently work there.
I’ll be surprised if it can be sold.
