Origin Energy’s LNG revenue slips as COVID-19 dents demand, prices
Australian energy giant Origin Energy says revenue from its liquefied natural gas (LNG) joint venture has fallen 5 per cent for the year as the coronavirus pandemic guts demand, leading to fewer purchases and lower prices.
Following a write-down of up to $770 million for its Australia Pacific LNG (APLNG) joint venture, Origin on Friday said the project it owns with ConocoPhillips and China’s Sinopec posted record output during the 2020 financial year. However, that was offset by the impacts of COVID-19 pummelling the energy industry and forcing more gas cargoes to be sold on the spot market.
Origin’s realised prices for LNG during the June quarter, however, have proven more resilient than some of its rivals. The company said it had received an average LNG price of $US8.80 per million British thermal units, down 5 per cent from the same time last year but well above other Australian producers’ prices for the quarter of as low as $US5.
Analysts on Friday described the APLNG joint venture’s realised LNG price for the June quarter as “impressive” and said it highlighted the quality of its contracts.
“APLNG has delivered strong operational performance, lowered costs and realised relatively high LNG price,” RBC Capital Markets’ Gordon Ramsay said, adding that Origin’s overall quarterly results had exceeded expectations “in every facet of its business”.
Restrictions aimed at arresting the spread of the pandemic around the world has wiped out demand for petrol, diesel, jet fuel and natural gas, sending benchmark crude oil and LNG prices tumbling to multi-year lows. The effect of the lockdowns has also been felt in the electricity market as stores and big buildings are empty and more people work from home.
Origin’s electricity volumes for the 2020 financial year were down 7 per cent as a result of the impact of COVID-19 lockdowns on commercial customers and small and medium-sized business customers, mild weather and increased rooftop solar generation.
Origin this month said it would write off $25 million to $35 million for an expected rise in bad and doubtful debts due to the impact of COVID-19 on its customers’ ability to pay their energy bills.
“The pandemic has impacted natural gas and electricity demand, and some residential and small to medium enterprise customers are facing financial difficulties,” Origin chief executive Frank Calabria said.
“Our focus has been on supporting customers, and we have extended our commitments not to disconnect those in financial distress and to waive late payment fees until October 31.”
Business reporter for The Age and Sydney Morning Herald.
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