XOM Exxon Mobil Corp

By Robb M. Stewart

MELBOURNE, Australia--Exxon Mobil Corp. (XOM) has decided not to push ahead with plans for a natural-gas import terminal in Australia after failing to secure long-term customers to underpin the development.

The Irving, Texas-based energy giant said Monday it had undertaken an extensive study of the potential for importing shipments of liquefied natural gas but it hadn't received sufficient market interest to advance the project.

The proposed import facility, one of several projects being considered around Australia's eastern seaboard by companies looking to feed a tight gas market, had been pitched by Exxon as one option to complement existing gas supply from its established production operations in the Gippsland Basin. The company evaluated a number of possible locations for the terminal in the state of Victoria.

"We were seeking longer term contracts to help underpin the significant LNG import terminal project investment and there was insufficient interest from potential customers," the company said in an emailed statement.

Exxon said it would continue to assess the market and work with its customers to meet supply needs.

The company also continued to invest in the Gippsland Basin in Bass Strait, including in exploration. Less than three months ago, Exxon confirmed it was seeking buyers for its oil- and gas-producing operations in southeastern Australia as part of efforts to test market interest in a number of assets worldwide. No agreements had been reached and no buyers identified, the company said.

Manufacturers in southeastern Australia have struggled in recent years with a sharp rise in gas prices, brought on in part by a boom in exports of LNG to Asia from three big plants in Queensland and restrictions by some state governments on developing gas fields. That has spurred proposals from companies including power utility AGL Energy Ltd. and a consortium backed by mining billionaire Andrew Forrest to use vessels to store LNG, before heating it to supply customers directly or through local gas-transmission networks.

Industry consultancy Wood Mackenzie has estimated the east coast could face a gas shortage next decade, driving the need for local gas resources to be developed and for a LNG terminal to be in place by at least 2025. It views the need for an import project in Victoria as most urgent given the prospect of declining gas supplies from the Gippsland Basin through the 2020s.

Write to Robb M. Stewart at robb.stewart@wsj.com

(END) Dow Jones Newswires

December 02, 2019 01:47 ET (06:47 GMT)

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