Sydney Morning Herald: Broader Write-downs Feared in Queensland LNG

Fears have grown of wide-scale write-downs at Santos' and Origin Energy's new liquefied natural gas projects in Queensland after the collapse in oil prices drove British gas major BG Group to take an enormous $US6.8 billion ($8.7 billion) impairment of its Australian venture. 

Some $US4.1 billion of the pre-tax write-down was due to BG cutting its assumptions of future prices for oil, a factor that could apply equally to the valuation of Santos' $US18.5 billion GLNG venture and Origin's $24.7 billion Australia Pacific LNG venture, both still under construction in Queensland.

However, whether write-downs for those ventures are also in the wings depends on the underlying prices the companies assume, with no clear-cut rule applying in Australia, analysts said.

"It depends on what assumptions you use to test the impairment but all else [being] equal you would have to say GLNG is under material pressure as well, and APLNG should be but time will tell whether they choose to or not," said Credit Suisse energy analyst Mark Samter, who has long been bearish on the value of the Queensland coal seam gas-based LNG projects. MORE