However, the Crux project has already secured its key regulatory approvals, including a production license from the National Offshore Petroleum Securities Administrator and authorization from the National Offshore Petroleum Safety and Environmental Management Authority.
LNG prices have been trading at high levels for months, backed by the Russian invasion of Ukraine, which has forced major European buyers of Russian gas to look for alternative supplies and switch to other fuels.
Shell Australia President Tony Nunan said the development of the Crux camp “strengthens our commitment to Australia, including boosting the regional economy, creating jobs and providing training opportunities”.
He said using Prelude LNG’s existing infrastructure to process field gas “significantly reduces development costs, making Crux competitive and commercially attractive.”
Kavonic said Crux should be “a very valuable development given the high-margin filling economy in the midst of a hardened LNG market this decade in the wake of the Ukraine crisis.”
But he said its development also highlights the challenges of the initial Prelude gas tank, which has been absorbed by Inex’s neighboring Ichthys project. He also noted the risks for Shell to achieve sustained production rates on Prelude that could affect the value of Crux.
Prelude, the world’s largest offshore LNG production project, has suffered a series of technical problems and has only recently been restarted after a long outage following a power failure at the end of the year. last year which provoked a NOPSEMA security order.
Crux will involve a new offshore platform that will be operated remotely from the Prelude ship. It will initially include five offshore wells and a gas pipeline to connect the platform to Prelude, about 160 km away.
Construction on the project will begin next year, with commissioning in 2027. Production is projected to reach 550 million cubic feet of gas per day.
Shell’s global head of integrated gas, renewable energy and energy solutions, Wael Sawan, said the project’s gas would help Asia’s customers move away from coal and reduce emissions and help Shell meet growing LNG demand to supplement renewable energy.
“The project will also increase our customers’ security of supply, which is becoming an increasingly important consideration for global consumers, ”Sawan said.
Japan’s Osaka Gas had a 3% stake in Crux, but is believed to have sold it to Shell.