Companies have spent a total of $200 billion since 2009 to build seven new LNG plants in Australia, as part of the country’s push to become the world’s largest exporter of the fuel. However, two of those plants have been unable to work right. At the same time, the COVID-19 pandemic turned the economy of gas upside down while casting doubt on the outlook for the long-term demand recovery.
Shell-operated Prelude LNG plant has been unable to ship cargoes since January due to technical issues. The world’s biggest floating LNG plant also struggles with a labour dispute which sees service providers taking strike action in recent weeks. Shell’s spokesperson said it had begun a restart on Thursday, but timelines for production and export resumption remained unavailable.
The $54-billion Gorgon LNG plant in Western Australia’s Barrow Island was gradually shuttered after cracks were found at its propane kettles. Plant operator Chevron recently said it needed more time to conduct repair works at Australia’s most expensive LNG project before being able to bring back production online.
The COVID-19 pandemic is estimated to cut global LNG demand by 5.3% in 2020. Analysts expect that Australia’s LNG export revenues dropped 16% in the April-June quarter of 2020. Oil and gas companies have slashed their price outlooks while writing down billions of dollars worth of assets. In June, Shell took $8-$9 billion impairments of its gas business, mostly Prelude and Curtis LNG plant in Queensland.
