Arrow Deal Opens Prospect of QCLNG T3

A massive gas supply deal signed last week in Australia by Arrow Energy and the Shell-operated Queensland Curtis LNG joint venture opens up the possibility for a third train at the project, RBC Capital Markets analyst Ben Wilson said December 4.

The deal and Arrow’s commitment to develop the Surat Basin gas “gives rise the potential further down the track of a third QCLNG train,” he said, adding that the scale of the deal, covering 5 trillion ft³ of gas over 27 years, is surprising and a good indicator for the LNG market -- although he acknowledged that most expected an Arrow Surat development would proceed at some point in the future.

It is a “big deal by any estimation and in part speaks to the confidence that QCLNG/Shell has in the global LNG market outlook,” he said.

Whether the deal will cannibalise other potential East Coast Australia gas supply is unclear, Wilson added. 

“The quantum of Arrow gas to be developed does however mean that some of that gas or QCLNG gas will be available for the domestic market or for other LNG plants (Gladstone LNG principally),” he said.

“The Arrow-QCLNG does not necessarily preclude other sources of gas being developed over time into the East Coast market; however, we do think it removes high side gas pricing potential,” he said.