At least $11 billion of Australian gas projects are poised to be sanctioned next year, according to Wood Mackenzie’s Australasian upstream 2021 outlook report
The projects include three upstream final investment decisions (FIDs) – Mitsui’s Waitsia, Santos’ Barossa and Woodside’s Scarborough – and the AIE Port Kembla LNG import terminal, the report outlined.
“After doing everything possible to tighten belts this year, Australian operators will open their wallets and start spending,” Wood Mackenzie Senior Analyst Daniel Toleman said in a company statement.
“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,” he added.
Waitsia is expected to be the first “cab off the rank”, according to Wood Mackenzie. Located in the Perth basin, the project will export LNG from the North West Shelf with production starting in late 2023. Santos is then expected to sanction the Barossa gas project late in the second quarter and Woodside is likely to sanction the Scarborough to Pluto project, Wood Mackenzie highlighted. The company also expects AIE to sanction the Port Kembla import terminal to supply the East Coast market in the first quarter of next year.
Wood Mackenzie noted that it expects at least one “significant” LNG or infrastructure asset to change hands but warned that many assets will remain on the market “as the bid-ask spread cannot be closed and buyers struggle to move past the abandonment liabilities and complicated joint ventures”.
As international oil companies and majors exit the market, there will be opportunities for local players to take up bigger roles in the country’s upstream industry, according to Wood Mackenzie, which projected that small caps could take center stage in 2021.