The plummeting oil prices amid the coronavirus pandemic have threatened Australian LNG producers. Analysts said that smaller upstream firms might be forced to divest their assets, while larger companies are delaying major investment decisions until the market returns to normal. However, some firms are still optimistic and increase their exposure to LNG.
ICE Brent prices tumbled to as low as $19.33/barrel on April 21 and have recovered to around $40/barrel recently. However, it remained below $50s/barrel needed by Australian LNG producers to get back to their footings, analysts said.
LNG Limited (LNGL) in May sold its proposed 8mn tons/year Magnolia LNG project in Louisiana for just $2 million, well below its estimated value of $4.35 billion by late 2019. Far, another small Australian firm is looking for buyers for its 15% stake in the $4.2 billion Sangomar oil field offshore in Senegal. Sangomar requires an oil price of $45/barrel to be viable.
Meanwhile, Australia's larger firm Santos remains confident in the longer-term LNG outlook. The company recently purchased ConocoPhillips' northern Australia assets. Meanwhile, another Australian LNG firm Woodside has to defer its Scarborough and Browse backfill projects amid sustained low LNG prices.
