OSH 0.00% $4.04 oil search limited

PNG cost advantage

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    This is about OSH in PNG but the economics apply equally well to Horizon


    Oil Search pips Santos TIM TREADGOLD29 OCTOBER 2014

    Oil Search’s plan to expand the PNG/LNG project at a time when some companies are having second thoughts about future developments is explained by the project’s status as a low-cost producer, and confidence that demand for energy in the Asia Pacific region is stronger than most people realise. Macquarie Bank, in a major report published earlier this month on energy demand in Asia, added to Botten’s confidence because it described Asia’s energy sector as “short and getting shorter”. “Asia will see its primary energy demand rise by 37% by 2015,” Macquarie said, “and its energy imports rise by 53%. “Asia will be increasingly tight energy and we expect regional energy prices to thus rise over the next decade.” One graph demonstrated the cost advantage, with PNG/LNG enjoying the second lowest break-even cost of 11 LNG projects in the Australasian region. At around $US7.80 per million British Thermal Units the PNG/LNG project is marginally more costly than the cheapest (at around $US7/mbtu), comfortably below the next highest (more than $US9/mbtu) and close to half the cost of the most expensive LNG project in the region (almost $US15/mbtu).The price for LNG in the Asia Pacific region was expected to settle at between $US12 and $US14/mbtu in the period from 2020 to 2025. PNG/LNG will be handsomely profitable.
 
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