Arrow Energy sanctions Surat Gas Project

"Shell taking FID on the first phase of Arrow Energy's Surat Gas Project (SGP) in Queensland was a surprise, as project sanctions will be a rarity this year after E&P operators globally took an axe to their 2020 capital budgets. We understand the first of five phases to be developed is a lower cost expansion of the existing Tipton area, and will deliver an additional 255 TJ per day of gas to Shell's QCLNG project.

"We see the need for SGP gas to keep the QCLNG liquefaction plants full. But its likely this gas will be sent to the domestic market as well, as we see the east coast market tightening around 2024. Shell will now have additional flexibility to divert gas to the domestic market over this period."

Note: Arrow Energy is a 50/50 joint venture company between Shell and PetroChina.