Origin (ORG) wants out of the gas cartel. And who could blame it? There’s a war brewing between the cartel and various Australian governments and it will not be good for shareholders. Via The Australian:
Origin Energy is believed to be embarking on a strategic review of its upstream assets worth at least $8 billion dollars as it contemplates a future solely as an electricity retailer and generator.
…Up for review is Origin’s interest in APLNG, which is said to be worth at least $8 billion, its Beetaloo Basin exploration project in the Northern Territory and its Ironbark coal seam gas project in the Surat Basin in Queensland.
ORG may want to run for the hills but those hills are going to remain very expensive to illuminate if something is not done to stop the gas cartel. BG Group is already in the hands of Shell. Santos has changed it management and is knocking back buyout offers. And now ORG wants out of APLNG. That’s all three Curtis Island white elephants changing hands.
Soon the scoundrels responsible for the cartel will gone. And with each new iteration of the firms it gets harder to unscramble the egg.
So, let’s think radically instead. How about Australia buys the APLNG assets and turn them into the germ of a National Gas Company (AusGas). APLNG has lots of cheap gas, via BREE:
Even its highest cost gas is cheap for Straya! AusGas can operate as a good faith partner in APLNG but also put pressure on the board and management to ensure that the cheapest gas is dedicated to the Australian market. This will crimp profits, and require some write downs of the LNG plant but it will ensure that the other LNG exporters match the pricing so that the burden is shared.
As we go forward, AusGas can pick off or force acquire other reserves for development. Use it or lose it laws will be the trigger. This could put assets such a Narrabri and Victorian fields into the hands of a national firm operating under the strictest of environmental safeguards to appease communities dead against coal seam gas development. That would get more $8Gj gas out of the ground.
Sadly it’s pretty messy and is not exactly fair play. It would be much better to buy all of APLNG and disassemble it for export as scrap. But then acquiring, exploiting and scarcity charging a nation for its own gas is not very nice either.
Meanwhile, some good news on the APA pipeline bid, via the AFR:
A $13 billion bid by Hong Kong’s CK Group for Australia’s east coast gas pipeline network has been cleared by the competition watchdog but faces stiff opposition from all levels of federal government on national security grounds.
With the bid needing the approval of the Foreign Investment Review Board, senior sources told The Australian Financial Review that the government’s initial disposition was to block the bid although no decision had yet been made.
“We have serious concerns about it,” said a senior source familiar with the issue.
Good.
