The operators of Australian liquified natural gas (LNG) projects have widely opted to delay Final Investment Decisions (FIDs) and have decided to wait for the medium-term market reaction and then act accordingly as per the market situation. This has limited the scope for future liquefied natural gas (LNG) growth in the country, GlobalData has outlined.

According to GlobalData, LNG delays in projects such as Woodside’s Scarborough and Santos’ Barossa field have resulted in a reduced forecast for future LNG growth. Australia secured the top spot for global LNG exports in 2019 and these projects were expected to provide a second wave, but the sector may now not see additional growth this decade.

Image credit: GlobalData Oil and Gas Intelligence Center.

Upstream Oil and Gas Analyst at GlobalData, Joseph Wisdom, said while the immediate impact on Australian gas production has been minor in the first half of the year, it is the future LNG projects that have suffered the brunt of the COVID-19 impact.

“Now, the end of the decade may see the sector retaining its 2019 output peak, rather than achieving additional growth. However, further reductions in the LNG exports for the second half of this year due to the combined impacts of depressed demand and ongoing shutdowns are very likely,” Mr Wisdom said.

According to GlobalData, the delay of FIDs for backfill projects also raises the prospect of greater spare capacity than previously anticipated as production from the existing Pluto and North West Shelf developments decline.

The North West Shelf participants recently agreed to process third party gas from the onshore Waitsia field but this will not make up from the two-year delay to Browse, now not expected until 2028 at the earliest.

Mr Wisdom said the delays bring into question the necessity for expansions at the Burrup Hub, at least to the extent currently announced.

“By the time the Scarborough field comes online, there may be enough spare capacity at the existing LNG facilities to accommodate its production, presenting an alternative to the US$6.1 billion expansion at Pluto,” he commented.