Low Oil Prices Will Not Impact APLNG Project, Says Origin

Origin Energy says low oil prices will not impact its Australia Pacific LNG project which is expected to start next month.

“We have great partners in ConocoPhillips and Sinopec and our ongoing focus now is to become a lean LNG production business by continuing to reduce costs. For example, even if oil prices were at $23-25/barrel Australia Pacific LNG would be at operating breakeven,” Origin’s Chairman Gordon Cairns said Wednesday while addressing company’s shareholders meeting.

The Australia Pacific LNG Project is a coal seam gas (CSG) to LNG project based in Queensland. The project brings together a joint venture between Origin (37.5 percent), ConocoPhillips (37.5 percent) and Sinopec (25 percent).

Managing Director Grant King said Origin's businesses are performing well and provide a strong underpinning of earnings and cash flow.

“Whilst our year has been defined by the fall in oil price and the impact this has had on our share price, our existing businesses are performing well and provide a strong underpinning of earnings and cash flow. Australia Pacific LNG’s project will commence production shortly and even at current low oil prices will make an earnings contribution to our company,” King said.

Last month Origin announced it will sell A$2.5 billion ($1.8 billion) in shares to reduce debt. It will also reduce dividend for FY2016 and FY2017, make further reductions in capital expenditure and sell non-core assets to strengthen balance sheet.

“These initiatives will lower debt, strengthen the balance sheet and reduce reliance on distributions from Australia Pacific LNG,” Origin said last month.