Arrow Energy is still keeping its dream of more LNG jobs alive for the Curtis Island LNG project.
Resource sector companies Shell and PetroChina, after having poured nearly $800 million into the project last year, say they still want to build an LNG plant at Gladstone.
The 3 LNG trains currently under construction on Curtis Island will be one of Australia’s newest LNG hubs and Arrow Energy was planning to become part of the success story.
Dogged with financing and feasibility doubts, a cloud was looming over the Arrow project as it floundered awaiting some positive direction.
“LNG joint venture was still a high priority”
This latest report is very positive for people looking for a continuance of LNG jobs on Curtis Island. Rumours are circulating that prime real estate land which was originally earmarked for the plant, has been purchased on Curtis Island – although no one is saying if this current transaction meant the payment of any monies.
An official statement by the group was made to the Australian Securities Exchange proclaiming the 50-50 Arrow joint venture was still a high priority.
Despite media comments from Shell that it would be financially healthy for the company to partner with one of the three plants being built.
Arrow was quoted as saying in its full year accounts that they had made a significant investment in building the skills and capacity required to build its own LNG train on Curtis Island.
LNG jobs Curtis Island
In January 2014, Arrow announced that it was considering reducing staff, as it was unable to convince Shell and PetroChina that the project was economically viable. In a bold move by the two majors behind the project, Arrow was given a rap on the knuckles and told to sharpen its pencil and focus on reducing project costs.
There seems to be little evidence of job reductions at Arrow, the number of employees being 1173 this year, compared to 1136 in the previous year.
Arrow reported a $670 million after-tax loss, which was not a good result considering the previous year’s losses were $554m, as it ploughed ahead with its Queensland coal seam gas projects.
Given the financial condition of Arrow and the significant $8 billion invested in the company so far by Shell and PetroChina, there still seems a long road ahead before a new LNG plant on Curtis Island will become a reality.
Can a fourth LNG plant on Curtis Island go ahead?
LNG projects of this nature do take massive investment as the joint venture partners consider the longevity of the project and the inevitable profits that could be generated. Arrow has reported that its loan obligations stand at around $800 million, with revenues of $190 million. In terms of paying back loans, Arrow have been proactive by paying down $39 million.
Unlike other LNG projects such as the Gorgon LNG project in WA, which has a price tag approaching $60 billion (and climbing), any venture into LNG production must be accompanied by an accurate cost analysis which absolutely must be set in stone.