Sydney Morning Herald: Queensland LNG: projects undervalued

Investors are underestimating the value of the three mammoth liquefied natural gas projects nearing completion in Queensland and the magnitude of the cash they will generate for companies like Santos and Origin over the next two to three decades, say Morgan Stanley analysts.

Three LNG projects currently under construction near Gladstone are expected to move into production by 2015, they include the Santos-Total GLNG project, Origin Energy's APLNG and British giant BG Group's project.

Oil Search's PNG LNG project is also tipped to launch its third train of LNG production in 2015, and Morgan Stanley believes this will bring about a substantial jump in its annual production to 80-90 million barrels of oil equivalent.

"In our view, the market underestimates the magnitude and value of the free cash-flow set to flow to these businesses over the next 20 to 30 years," wrote Morgan Stanley analyst, Malcolm Wood, in a note to clients.

Santos' LNG project in Gladstone, Northern Queensland, is 80 per cent complete and expected to come on stream in 2015 with a capacity of 7.2 million metric tons per year. It also has a significant stake in Oil Search's Papua New Guinea LNG project. MORE