By Jessica Jaganathan
SINGAPORE (Reuters) – Royal Dutch Shell said on Tuesday the Australian unit and its joint venture partners have decided to postpone the final investment decision (FID) on the Crux gas project off the coast of Australia which was originally planned for 2020.
The Crux project is one of several global projects that has been delayed in the past few months after the fall in energy prices.
LNG demand has reached record highs recently thanks to the tastes of China and India as they diversify away from the dirtier coal power plants, but falling oil and gas prices have caused major LNG exporters to delay new giant facilities or expand existing projects there is .
Shell and its joint venture partners decided to postpone FID “due to the global economic downturn, including a sharp fall in oil prices, market declines and uncertainties regarding the COVID-19 pandemic,” a spokesman said in a statement emailed to Reuters, adding that Shell remained committed to develop Crux.
“This is consistent with Shell’s global approach to actively managing all operational and financial levers, including reducing capital expenditure,” he added. At the end of March, Shell said that it had withdrawn from the main USS LNG export plant in Louisiana, citing falling energy prices.
Crux, which is owned by Shell, Osaka Gas and the Seven Group Holdings unit, is one of several gas fields awaiting development in northwestern Australia.
The project will be developed to supply refill gas to the Prelude floating LNG facility in northwest Australia.
The shipment of cargo from the Prelude Shell facility, which is the largest floating LNG facility in the world, has been suspended since February after an electricity trip.
Making a final investment decision on capital-intensive projects such as LNG will be challenging this year, Gavin Thompson, deputy chairman of energy in the energy division of Wood Mackenzie, told Reuters late last month.
“If you look at the upstream industry, maintaining cash on the balance sheet is an absolute priority. So ADJUSTING every new project that is very capital intensive at the moment, shareholders don’t want to do that,” he said.
(Reporting by Jessica Jaganathan; Editing by Edmund Blair and Susan Fenton)
to request modification Contact us at Here or [email protected]