by Chris Becker
More bad news on the LNG front as the plunge in oil affects more than just the price at the pump. From Fairfax:
“Browse is dead. Projects that are in construction will finish, but anything that’s theoretical, on the drawing board, is just going to get pushed back,” said RBC Capital Markets analyst Andrew Williams.
Woodside last month put back a target for starting engineering design work on the Browse floating LNG project to mid-2015 but few expect that target to be met without a rebound n prices.One Sydney-based analyst said, “We are no nearer to first gas from Browse today than two years ago.”
Its not just Browse, but the “worthless” Santos, with its huge GLNG plant in QLD still under construction and probably not going to be profitable or even viable at current prices.
Write downs are coming which means more pressure on stock prices:
BG Group also last month flagged a write-down on its new $US20.4 billion Queensland Curtis LNG project, which only came into production late December.
“The reality is these things are not worth close to book value,” said Credit Suisse energy analyst Mark Samter.
“You have to believe you’re going to see enormous write-downs in particular from Santos and Origin – BG have already taken an initial write-down on QCLNG and alluded to the fact it could take a larger one.”
Moody’s senior vice president Tom Coleman says lower oil-linked pricing for LNG and uncertainty over demand growth are already taking a toll on prospective new projects, both brown-field expansions and giant green-field ventures.
Chevron has also again put back a decision to start design work on an expansion of the massively over-budget Gorgon project in WA, while new LNG projects in East Africa and Canada planned by Eni and BG could be slowed or cancelled, Mr Coleman said.
Better start pumping up that housing construction because there’s going to be a lot more mining jobs going to the wall for a very long time. Investment positioning against this macro backgroup would require some swift work catching rallies on very short timeframes alone.