Via the AFR yesterday on Santos:
The company is targeting a final go-ahead for the Barossa project by the end of 2019, while an investment decision on the PNG LNG expansion is also due around that time. Mr Gallagher also said Santos is on track to ramp up sales at the GLNG venture in Gladstone to about 6 million tonnes a year by the end of 2019.
The GLNG project, where Santos is partnered by France’s Total, Korea Gas Corporation and Malaysia’s Petronas, has been running at just over half its capacity due to a lack of economic gas supplies.
GLNG nameplate capacity is 7.8mt but could easily be exceeded. In other words, STO has enormous capacity to ramp up LNG exports and it will if allowed to.
If we add LNG imports to this mix then what will happen is this:
- domestic reservation collapses;
- the foreign gas, which will arrive at around $17Gj versus $9Gj today, will allow STO to absorb more local gas for exports;
- the local price will quickly rise to meet the marginal cost of supply coming from offshore;
- any increased local production below the import price, which will take years to produce, will immediately be soaked up by GLNG as well;
- eventually demand destruction and more expensive local gas production that can get around community resistance will knock out the import terminals;
- that is, so long as another export terminal isn’t built!
More domestic reservation is needed not less.
