Origin Energy reveals toll of stranded LNG vessel

A LNG vessel became stranded at Curtis Island in November, and now Origin Energy has finally disclosed the impact on its exports.

Origin Energy has reported a 4 per cent decline in LNG exports during the three months ended December 31, as a result of a stranded vessel that halted operations and left three ships unable to be loaded.

The result reveals the toll of the days-long saga caused when the Hong Kong owned ship, Cesi Qingdao, which was due to travel to Wenzhou in China, lost power and had to remain connected to the mains at Australia Pacific LNG facility on Curtis Island.

Only one vessel can be loaded at one time, with slots tightly co-ordinated to avoid periods when the port is empty.

The outage forced Origin, which is the upstream operator, to lower production from gas wells in Queensland and increase supplies to the domestic market, though it was insufficient to offset the lost output that would have otherwise gone to the LNG export terminal.

While quarterly production fell 4 per cent, Origin said half-year production was 3 per cent higher compared with those reported one year earlier, driven by increased number of wells online and effective well optimisation activity.

Origin chief executive Frank Calabria praised the APLNG operations for restarting operations after the suspension of works when the LNG vessel failed.

“It was pleasing to see production rebound to a daily record by mid-December, following the turn down due to the LNG vessel that lost power at Curtis Island in late November,” said Mr Calabria.

Origin said quarterly revenue from its stake in APLNG was 1 per cent higher at $2.38bn. Half-year revenue was down 21 per cent as global gas prices retreated and lower domestic demand.

Origin said it received a six-month revenue from its stake in the APLNG facility of $648m, down 17 per cent.

The APLNG facility is one of Origin’s most prized assets and was a key element of why EIG Partners partnered with Brookfield in its failed near-$20bn bid for Australia’s largest electricity and gas retailer.

While the takeover bid ultimately failed, it continues to provide a lucrative revenue stream for Origin, which must accelerate its transition to new renewable energy generation and continue to pay strong dividends to investors.

Origin is under some pressure to move quicker to meet its renewable energy goals or developing up to 5GW of new zero emission projects, though any unrest was dampened when it earlier this week announced plans to spend $400m on a new battery at the Mortlake Power Station.

The 300MW battery, which is expected to be ready in late 2026, is a boost to Australia’s energy transition goals, which remain behind schedule,

The Mortlake development will be Origin’s second battery development after committing $600m to build a large-scale project at the site of its soon-to-close Eraring coal power station

Mortlake Power Station is the largest gas-fired power station in Victoria, with a generation capacity of 566MW. The peaking power station is powered by gas from the Otway Basin.

Origin’s earnings are also bolstered by a fresh deal with Beach Energy for gas.

Beach Energy, majority owned by billionaire Kerry Stokes, last week confirmed a fresh multi-year supply deal with Origin, which included a “modest” increase.

Analysts had pencilled in increases of around $11 a gigajoule, a small increase on the previous deal that was believed to be in the vicinity of $10.50/GJ.

But The Australian understands the new deal is below $11/GJ – indicating Origin was able to secure extremely favourable terms.

Mr Calabria described the deal as “very pleasing”.