Senex suspends A$1bn expansion of Atlas gas project in Queensland
Australia’s Senex Energy, majority-owned by Korea’s POSCO International, will suspend the A$1bn ($670mn) expansion plan for its Atlas gas project in Queensland amid the federal government’s decision to cap gas prices, the company said on December 22.
“New laws passed by the Albanese government that could arbitrarily dictate investment returns for gas producers puts at risk Senex Energy’s A$1bn investment plan to bring new gas to the east coast market,” the company said. “This will result in less gas, electricity shortages, fewer jobs and weaker regional communities that rely on the resources sector.”
|
Advertisement: The National Gas Company of Trinidad and Tobago Limited (NGC) NGC’s HSSE strategy is reflective and supportive of the organisational vision to become a leader in the global energy business. |
In August 2022, Senex announced plans to expand its Atlas and Roma North natural gas developments in Queensland’s Surat basin. These developments planned to increase the company's production to 60 petajoules (PJ)/year, representing more than 10% of annual east coast gas demand, and around 40% of annual Queensland gas demand, Senex said.
In September 2022, Senex commenced an expression of interest (EOI) process for the supply of gas from the Atlas investment starting in 2024 until 2039. Senex subsequently received offers oversubscribing the available supply by more than five times in the early years of supply, and with “solid interest” extending out to 2039, it said.
“Whilst Senex continues to engage with these customers, these new laws have made it impossible to contract with confidence and puts this investment, and therefore new gas supply to homes and industry, at risk,” the company said.
Senex CEO Ian Davies said the company will honour existing commitments to customers, however given the new laws it is not possible to finalise any new gas agreements.
“Until we know the scope of future government actions under the yet-to-be-developed Code of Conduct, and the potential for retrospective application of measures, including the breaking of agreed contracts, it is prudent to review all investment,” Davis said.
“The fact that our EOI process was heavily oversubscribed with satisfactory offers for over 200 PJ of new gas supply on up to 15-year contracts shows that the market desperately needs additional supply which will be put at risk by these ill-advised draconian market-control measures,” Davies added.
Senex has suspended major items of investment for its expansion, including recruitment for 70 roles and more than 300 contractor jobs during construction, pending the outcome of the consultation process ending in February 2023.
Australian peak oil and gas body APPEA said the government’s “heavy-handed reforms” introduced without proper consultation had, in less than a week since passing parliament, “dealt a blow” to new east coast domestic gas supply and future energy security.
“This decision by Senex Energy is exactly what the industry warned of when the government decided to take unprecedented, permanent control of the gas market and regulate the rate of return for these investments,” APPEA CEO Samantha McCulloch said.