(Adds details)
By Jessica Jaganathan
SINGAPORE, April 7 (Reuters) - Royal Dutch Shell
said on Tuesday its Australian unit and joint venture partners
had decided to delay a final investment decision (FID) on the
Crux gas project in offshore Australia that was initially
planned for 2020.
The Crux project is one of several globally that have been
delayed in recent months following the collapse in energy
prices.
LNG demand had been hitting record highs until recently
thanks to appetite from China and India as they diversify away
from dirtier coal power generation, but the crash in oil and gas
prices has caused major LNG exporters to put off gigantic new
facilities or expansions of existing projects.
Shell and its joint venture partners decided to delay the
FID "due to the global economic downturn, including the sharp
drop in oil price, declining markets and uncertainties with
regard to the COVID-19 pandemic," a spokeswoman said in a
statement emailed to Reuters, adding that Shell remained
committed to developing Crux.
"This is consistent with Shell's global approach of actively
managing all operational and financial levers, including
reducing capital spend," she added. In late March, Shell said
that it had pulled out of a major U.S. LNG export plant in
Louisiana, citing the crash in energy prices.
Crux, owned by Shell, Osaka Gas and a unit of Seven
Group Holdings, is one of several gas fields that have
been awaiting development off northwestern Australia.
The project will be developed to supply backfill gas to the
Prelude floating LNG facility off northwest Australia.
Cargo liftings from Shell's Prelude facility, which is the
world's largest floating LNG facility, has been suspended since
February following an electrical trip.
Making a final investment decision on capital intensive
projects such as LNG will be challenging this year, Gavin
Thompson, vice chairman of energy at Wood Mackenzie's energy
division, told Reuters late last month.
"If you look at the upstream industry, preserving cash on
balance sheet is absolute priority. So FIDing any new projects
that are very capital intensive right now, shareholders don't
want to do that," he said.
(Reporting by Jessica Jaganathan; Editing by Edmund Blair and
Susan Fenton)
