Senex Energy to invest A$650mn to boost gas output in Australia
Senex Energy, majority-owned by South Korea's Posco International, will invest A$650mn ($430mn) to increase gas output in Australia, Posco International announced on June 17.
Senex Energy plans to build a 60 petajoule/year production capacity by 2026. According to Posco International, 60 petajoules is enough to produce 1.2mn tonnes of LNG. Posco International will contribute A$326mn to this capital increase, based on its 50.1% stake in Senex Energy.
Hancock Energy, which owns a 49.9% stake in Senex, will cover the remaining investment. The funds will be used to drill additional gas production wells and build gas field production facilities, including gas processing facilities and pipelines.
This investment aims to accelerate the company’s plan to triple natural gas production, announced in July 2022, in response to the expected gradual decrease in natural gas supply in eastern Australia, Posco International said.
Senex Energy has secured long-term gas supply contracts with major companies, including Australia’s largest electricity generation company, AGL, as well as BlueScope, Liberty Steel, and others, for 151 petajoules of gas to ensure profitability after increased production.
The company's operating profit has shown strong growth since becoming a subsidiary of Posco International in April 2022. In 2021, Senex produced 19.6 petajoules of gas and recorded A$26mn in operating profit. By 2023, gas output rose to 26.9 petajoules, and operating profit jumped to A$58mn.
By 2026, when the additional gas is supplied to eastern Australia, Senex Energy is expected to generate more than 600bn won/year ($430mn) in sales, according to Posco International.
Furthermore, Senex Energy plans to secure additional reserves by expanding production from existing gas fields and drilling exploration wells. Drilling will begin in July 2024 at the Rockybar exploration site in eastern Australia. With its 50% stake in the Range evaluation, Senex Energy aims to maintain a stable gas business through continuous development even after this expansion.