Royal Dutch Shell will be investing less into LNG starting this year. The intention to slow down on investment into liquefied natural gasses will continue towards 2020, insiders in the company have confirmed.
"Integrated gas, which was previously a growth priority for Shell, has reached critical mass following the BG acquisition...particularly in Australia. The pace of new investment will slow here," said Shell chief executive Ben Van Beurden.
Shell bought rival BG Group (a group known for its LNG sales) for $50 billion. After the purchase, Shell said it would "limit spending" on new projects. There is an impending $40 billion project in Canada that still needs to happen, however, analysts are saying it could be postponed.
Shell will be exiting 5 to 10 countries to further cut spending, under the oil crisis the world currently finds itself in. They are now moving closer and closer to shale oil and gas production and renewable energies. This would leave Australia - now one of the biggest LNG producers - without major investment in LNG.
"There is a view that says if we wait, we don't have to do anything because the demand of the developing world will grow...and if we turn off coal power stations, gas demand will go up, and next year's conference will be a rosy one. Well, nothing could be further from the truth. Simply surviving is not an option...we must change to grasp the opportunity in front of us," said Woodside Petroleum chief Peter Coleman, talking to a crowd at the Australian Petroleum Production and Exploration Association in Woodside.
"LNG is still a segment that strongly supports reinvestment. But LNG moves in fits and starts and it demands investment in big lumps," Van Beurden said.
Coleman further berated the Australian LNG industry for investing into the wrong areas. LNG projects topped $200 billion in investment in the last ten years. He said: "While we may wax lyrical about the $200 billion, it actually started as $100 billion. We shouldn't be proud of the $200 billion. We didn't deliver on our promise, we've delivered a very expensive energy source."
Source: The Australian / Reuters
