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There are two elephants in the LNG room

April 01, 2021
Bruce Robertson
Document

Key Findings

Investors are in the dark about the financial implications of emissions from Woodside’s proposed Scarborough gas field in the offshore North West Shelf, Western Australia, as the company has yet to release its carbon price sensitivity modeling.

There is no carbon capture and storage proposed for Scarborough. Instead, Woodside offers a fig leaf of carbon offset projects.

With carbon pricing imminent in Australia, the gas industry is failing to keep investors informed as to the financial sensitivity of their businesses to carbon prices.

Executive Summary

Woodside’s proposed Scarborough project is a high-cost project in a world where low cost expansion projects in Qatar are bringing on gas at under half Scarborough’s costs.

The Scarborough project is remote from onshore processing facilities, produces very dry gas, and is a technically difficult field to develop.

There is no carbon capture and storage proposed for Scarborough.

There is no carbon capture and storage proposed for Scarborough. Instead, Woodside offers a fig leaf of carbon offset projects.

All of Australia’s major export LNG customers have net zero climate commitments. The U.S. and Europe are likely to introduce carbon tariffs forcing the Australian government into some form of carbon pricing.

Australia is a trading nation and cannot afford more barriers to trade.

The gas industry is failing to keep investors informed as to the financial sensitivity of their businesses to carbon prices.

With carbon pricing imminent in Australia, the gas industry is failing to keep investors informed as to the financial sensitivity of their businesses to carbon prices.

IEEFA calls on the Australian Stock Exchange (ASX) to enforce its continuous disclosure provisions and make the gas companies release their modelling on carbon price sensitivity.

Investors clearly are not fully informed about the financial implications of the emissions from the Scarborough gas field.

Bruce Robertson

Energy Finance Analyst – Gas/LNG, Bruce Robertson has been an investment analyst, fund manager and professional investor for over 36 years. He has worked with Perpetual Trustees, UBS, Nippon Life Insurance and BT. He has appeared as an expert witness before a number of government enquiries into energy issues.

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