Aussie Upstream Projects Poised for Rebound

(Oceania) US$11 Billion in FID

At least US$11 billion of upstream gas projects are expected to commence in 2021, according to analysis by research consultancy Wood Mackenzie.

The findings suggest that 2021 may be a bumper year for breakbulk activity in Australia, as delayed LNG projects get underway. Final investment decisions are now expected on major upstream developments such as Mitsui’s Waitsia, Santos’ Barossa and Woodside’s Scarborough

“After doing everything possible to tighten belts this year, Australian operators will open their wallets and start spending. The backlog of FIDs will begin to clear as a fresh round of projects are sanctioned. But for this to occur, there has to be continuing improvement in the macro-environment and prices trending up,” said Daniel Toleman, senior analyst at Wood Mackenzie.

Energy Transition Story

The vast Waitsia project, located in the Perth Basin, is expected to be among the first to reach a final investment decision next year, with production slated to start in late 2023. Following this the Barossa gas project is expected to receive the go ahead from developer Santos late in the second quarter.

“If there is anything set for 2021, it is the energy transition story and how Australia will play a leading role. Central to this will be revision of plans for new and existing developments. Electrification, CCS and batteries will be the preferred options to reduce carbon emissions.," Toleman said.

Scarborough to Pluto

In the Indian Ocean, off the coast of Western Australia Woodside is also planning to sanction the Scarborough to Pluto project, expanding LNG capacity .  

“Woodside will sanction the project without contracting any additional LNG, taking on exposure to the spot LNG price. This is a bold strategy which allows them to take advantage of strengthening near-term market fundamentals,” Toleman said.

Alongside the impact of major developments such as these, Toleman also predicts that Australian small caps could “take center stage” in 2021 as a raft of smaller projects are sanctioned next year.

Headquartered in Edinburgh, Scotland, Wood Mackenzie is a subsidiary of Verisk Analytics, a global data analytics and risk assessment group.
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