Another Queensland gas deal stalled by market uncertainty
Another Queensland gas deal has been stalled after Senex announced a pause on its Surat Basin expansion.
It follows a decision by Comet Ridge and the State Government’s CleanCo to extend negotiations because of market uncertainty.
Shell QGC’s has also suspended a gas tender for 2023 and 2024 because of the uncertainty relating to the Federal Government’s intervention in the market with a price cap on gas of $12 a gigajoule.
Armour Energy also said today it was pivoting away from gas to liquids because of the uncertainty.
Senex, owned by Gina Rinehart’s Hancock Energy and POSCO, reportedly stalled the $1 billion expansion of the Atlas and Roma North fields because of the Government’s intervention.
The Government’s strategy has angered the sector with Santos calling it a Soviet-style response while State Gas chairman Richard Cottee also critical despite it having minimal effect on the company.
Comet Ridge managing director Tor McCaul said the plan had been for the company and CleanCo had the option to execute the gas sales agreement by the end of 2022 for the supply of gas from the Mahalo project in central Queensland.
“However, as a result of recent market uncertainty Comet Ridge and CleanCo have agreed to extend the negotiating period until the end of March 2023,” McCaul said.
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In a recent market update, Comet Ridge cited an EnergyQuest finding that the price cap would remove about 700 petajoules a year from the market.
The stalling of the CleanCo deal has happened before. In June, the company announced an extension of the negotiations to allow for parties to assess key terms and negotiate.
In 2019, Comet Ridge and the Government owned Stanwell Corporation struck a deal to negotiate for between 20 and 30 petajoules of gas.
CleanCo has ownership of the Swanbank E power station that was previously owned by Stanwell.
Armour Energy said that because of the market intervention, it was “pivoting its short term focus to increase its liquid hydrocarbon production.
“Liquids prices remain robust and therefore, Armour will renew its focus on the under-developed and liquids-rich Rewan Foundation,” it said in a market update.
Armour said it was exempted from gas caps for any gas sold in the short-term market.
“The logical path to addressing the issue is to promote and facilitate a supply response,” Armour chief executive Christian Lange said.
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“Armour has a diversified portfolio of assets and income streams and while gas makes up more than 60 per cent of our revenues, liquids (gas condensate, oil, LPG) continue to play an increasingly important role in the portfolio.
“Naturally, we will focus on accelerating the development of our liquids rich opportunities.”
Gas lobby group APPEA said the Senex decision was a sign of the risk stemming from the Government’s intervention.
APPEA chief executive Samantha McCulloch said the intervention was a blow to east coast domestic supply.
“No new gas supply means no downward pressure on prices and increased risk of future shortages,” she said.
