LNG Market Outlook: Australian Projects Poised to Get Green Light

LNG in World Markets

February 2020

Woodside Petroleum and Santos may become among the first operators to move ahead on liquefaction projects this year as offtake discussions are well advanced. The two companies said in February that they plan to make final investment decisions (FIDs) on their Australian projects in the first half. Sempra LNG’s 2.4 MMt/y Energia Costa Azul project in Baja California, Mexico is another project that could take FID by end-March, according to Sempra Energy unit, IEnova on Feb. 20. Woodside wants to reach FID on the Scarborough gas field to supply the Pluto LNG expansion by mid-year, the company said on Feb. 13.

It opened the data room for shortlisted buyers in February as part of an auction process to sell down the upstream share in Scarborough. Buyers could discuss upstream equity and LNG supply offtake deals as part of the negotiations, with the aim of getting Scarborough to FID. Woodside is already in advanced talks with two potential partners, sources said. The expiry of the engineering, procurement and construction contract for Pluto’s second train with Bechtel before mid-year adds to the impetus. Costs are expected to rise by $200 million if the EPC contract is renegotiated, sources said.

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