Australian Origin Aiming to Slash APLNG Costs

Australian Origin Energy is planning to slash A$500mn ($380mn)/yr of capital and operating expenditure over 18 months at its Australia Pacific LNG project in Queensland, Australia, the company said November 28.

APLNG formally completed its lenders' test in August to satisfy the banks that the plant was capable of working as advertised, and now Origin, which is the project’s upstream operator, can shift its focus to “aggressively” reducing costs, a spokeswoman for Origin said. The company is taking examples on how to do so from the US shale gas industry, she added.

Origin is targeting an operating break-even of $24/boe from June 2019, which is down from its guidance for fiscal 2017-2018 (July-June) of $30/boe. Meanwhile, the company reaffirmed its sales guidance for APLNG for fiscal 2017-2018 of 689 PJ, which is up from 608 PJ in the past fiscal. The sales are expected to be made up of 433 PJ of contracted LNG volumes and 256 PJ of domestic gas and spot LNG, it said.

The 9mn mt/year nameplate capacity APLNG project is a joint venture between Origin (37.5%), ConocoPhillips (37.5%) and Sinopec (25%).

Its two trains began production in January and October of last year, respectively.