Comet Ridge Mulls Stake Sale in Oz Mahalo Gas Project
Sydney-listed Comet Ridge is looking to sell a portion of its interest in Mahalo gas project in Queensland to fund the equity component for that development, it said on July 30 in a statement. The move will also enable it to concentrate on developing its 100% owned Mahalo North project (ATP 2048).
Earlier this month Comet Ridge announced that the Mahalo gas project had been granted petroleum leases (PLs) 1082 (Humboldt) and 1083 (Mahalo) for a term of 30 years. The Mahalo gas project is located inside the northern part of the ATP 1191 area. This project is held 40% by Comet Ridge, 30% by Santos and 30% by APLNG, which is a joint venture comprising Origin Energy, ConocoPhillips and Sinopec. The joint venture has yet to formally agree a date for final investment decision or for the first gas.
Meanwhile, the company believes that the east coast gas market should move from oversupply to being significantly short gas, around the time that the Greater Mahalo Development Area, comprising the Mahalo gas project and Mahalo North project, gas fields will be entering the market.
“The impact of Covid-19 has seen softer energy demand globally, leading to weaker global oil and LNG prices. This has resulted in significant write-downs of the value of Australian LNG assets by the majors in recent weeks,” it said. “The east coast gas market is currently in surplus because of weakness in international LNG demand as well as lower domestic gas demand. This has a flow on effect to local gas spot pricing and will lead to a corresponding industry-wide decrease in future investment in gas exploration and project development.”
Comet Ridge expects a significant reversal of the current softer spot gas prices from 2022-2023 owing to natural decline of tier 1 producing gas assets across the main producing basins of eastern Australia; a reduction in current and near-term investment, resulting in not only less new gas supply entering the market than has currently been forecast, but existing fields without ongoing expansion drilling declining quicker than anticipated; a lack of government support and clarity for new supply sources from emerging gas producing regions; and the higher cost of new gas resource development needing to be reflected in term contract pricing.