APLNG, Gorgon and the North West Shelf project have reportedly deferred maintenance plans in the need to reduce capital expenditure as producers face financial difficulties amid COVID-19 and declining oil and gas prices.
EnergyQuest, in its March update, outlined that Woodside aims to cut total expenditure in 2020 and cancel or defer non-essential activity, culminating in a $100 million reduction.
“Manpower issues, in light of country lockdowns and travel restrictions to curb the spread of the pandemic, could be another key reason for the deferment of maintenance, as companies grapple with mobilising personnel on site, as well as transporting them in from other locations, market sources said,” EnergyQuest reported.
EnergyQuest has forecast that due to maintenance delays for LNG projects, it had led to fears it will deepen the glut.
“Several industry participants said that the decision to delay maintenance could also have stemmed from producers’ projection of a further downside to oil prices in the near future, as oil- linked contracts haven’t fully seen the impact of lower oil prices as yet due to the lagged pricing,” EnergyQuest outlined.
“However, with widespread term contract cancellations and cargo deferments, postponed maintenance could exert even more supply pressure on the spot market contributing to the weakening sentiment in the spot LNG market.”
In addition, the report highlighted how unions were reporting on over 400 contract employees form Woodside’s Goodwyn and North Rankin platforms, as well as the company’s floating production and offloading units being stood down.
EnergyQuest also stated that Santos has lost around 150 staff, whereas Shell, INPEX and Jadestone have all come to arrangements with employees to provide flexible and special payments.