QUEENSLAND Curtis LNG project owner BG Group has taken an impairment of US$5.9 billion after tax across the company in its 2014 results.
In a teleconference with analysts, BG interim executive chairman Andrew Gould said the impairment was due in part to the sharp fall in world oil prices and to reserves downgrades at its Egyptian projects.
The third reason was a US$1.8 billion charge relating to the sale of its QCLNG pipeline to APA Group for about US$5 billion, announced in early December.
“We expect this charge will be more than offset by a profit on disposal once that sale completes,” he said.
BG chief financial officer Simon Lowth said another US$3.4 billion of the amount written down related to changes in price assumptions, leading to an estimated US$4.1 billion reduction in revenue from the QCLNG project.
The start-up of QCLNG was a sign of good progress for 2014, with the company to focus on the ramp up of Train 1 and completion of Train 2 by the second quarter of 2015.
Mr Lowth put the cost of completing Train 2 at less than US$500 million, with an ongoing capital expenditure spend of between US$1 billion and US$1.5 billion.
“As with Train 1, we are allowing six months to ramp up to full capacity, meaning that we should be producing around 8 million tonnes of LNG by mid-2016,” Mr Gould said.
“We have around 2,350 wells drilled and 1,600 available for production or de-watering, providing gas to the LNG plant,” Mr Gould said, adding that production had reached 60,000 barrels of oil equivalent in January.
“We will continue to invest in Brazil and Australia, which are both businesses with relatively low costs of production which will continue to deliver growth,” Mr Gould said.
The company would also continue to focus on efficiencies, he said, though costs would remain high.
BG said its total prodution would be between 650,000 and 690,000 barrels of oil per day in 2015.