Over the past few weeks, the rules of the “great game” being played in Australia’s liquefied natural gas industry have started to become somewhat clearer.
In a burst of remarkably synchronised (or competitive) announcements, each of the major players said progress was being made on their respective pet project.
Woodside scored a win with the Western Australian Government over the terms by which it supplies domestic gas from its export-oriented Pluto project.
Chevron then racked up an equally impressive win with State Government environmental approval for Gorgon.
And not to be outdone, ExxonMobil appeared to fall into line with BHPB’s desire to make Scarborough a winner, appearing to end a year-long impasse.
It is possible, The Slug concedes, that the three separate LNG projects with their collective $25 billion price tag (plus or minus the odd billion) all arrived at similar “good news” points quite coincidentally.
But if you believe that, then you probably also spend some of your free time communing with the pixies at the bottom of your garden.
No, dear reader, coincidence in the multi-billion game of building LNG projects is not a reasonable explanation, especially when you look at the timing of what’s been happening recently.
Let’s start with a trip to Pluto. Ten days ago, on December 8, Woodside and the WA Government agreed on domestic gas sales terms, and on the same day the Woodside board agreed to spend $1.4 billion on long-lead time items for the Pluto project, which has an all-up price tag of between $6 billion and $10 billion – a eyebrow-raising cost estimate gap if ever there was one.
Four days later, Gorgon had its moment in the sun when it won State Government environmental approval, including what is possibly the world’s first “turtle management program” which presumably means a team of Chevron people carefully escorting said amphibians into the appropriate mating and nesting positions.
But as the man selling steak knives says, there’s more!
Two days after Gorgon clears a hurdle, ExxonMobil bobs up to say that Scarborough isn’t such a dog of a project, and perhaps the numbers do add up, and perhaps we really ought to be more serious in our studies with BHPB.
Forgive The Slug for being such a cynical old codger but think about it, dear reader.
Three mega-projects, over a six-day burst of activity between December 8 and December 14, all suddenly clear the blockages in their systems and find a way ahead.
Forget the official explanations, this is what really happened – and treat this explanation as a guide to future events.
Woodside is desperate for a win, desperate to develop its own 100%-owned LNG project, and desperate to shake free the shackles of its 34% shareholder Shell Oil.
Chevron is keen to develop its 50%-owned Gorgon project (but has lots of other options around the world), and must push ahead to a formal development point (sometime next year) – at which time it will find whether its partners, Shell and ExxonMobil, with 25% each, are in or out.
BHPB wants to develop Scarborough because it wants to be a player in the global LNG business.
ExxonMobil is already a player and is now thinking about whether it wants to have a 25% stake in Gorgon or 50% in Scarborough.
Shell, with a finger in the Woodside pie and 25% of Gorgon, hasn’t really got a clue what to do because it’s so jammed up over the Sakhalin disaster where the Putin mafia (sorry, Russian Government) looks like snatching a controlling stake.
Think too much about who owns what and what might evolve, and your head will hurt – but that’s traditional for this time of the year.
Best just let it roll along, enjoy the tit-for-tat exchanges of media statements, and may the man with the biggest LNG project win the day.
With that final thought, have a terrific Christmas and fabulous New Year.
