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Canadian firm stops LNG projects
#16

Did a little more homework.  Further looking is unnecessary.  Companies' decisions are all driven by their outlooks and whether their past decisions are delivering as forecasted.  When either of these two start looking worse than their acceptable range of risked scenarios, then plans have to change to adjust to the new realities.  So things stated in prior CCs about plans and outlooks may change.

This SA article gives some insight along those lines. http://seekingalpha.com/article/3903506-total-s-business-model-viable

The article refers to Total's 2015 results and outlook presentation.  Of particular interest to me are slides 19, 20 and 24.  The first two show projects and the last one cash flow.  Prices have to rise significantly this year and beyond to fulfill their plan.  Also 9 projects that started up in 2015 need to keep ramping up into 2016.   Additionally 5 more need to startup in 2016.  See slide 19.  That is a huge amount of startup activity that will dramatically change the cash flow.  In my opinion the range of uncertainty in startup volumes x product price for 2016 is large. I know nothing about those projects except Kashagan.  Total's WI x the nameplate gross deliverability show that it will become by far the largest cash generator of 2016 startups. However, that project is severely sour and very dangerous, a total technical and financial nightmare with billions of cost overruns and a decade or more of delay.  Both pipelines failed at startup in 2014 after only a few hours of flow due to bad metallurgy according to news online.  Reportedly both lines cannot be repaired but must be replaced.  It's possible more failures may occur elsewhere in the system adding more cost and delay when the next attempt at startup occurs, supposedly in 2016.  So a question is how much have they risked the volumes and is it enough?  This is just one example to say that the picture on cash flow could vary dramatically.  So back to my original speculation, I think Tot has large incentives to slow expenditures on less mature projects such as EA until these 14 start ups and prices progress more to give more confidence on cash flow.  So I think Tot is in a very cautious period.  The main confidence builder will be succeeding in timing and flow rates and volumes on 14 new projects.  Product price movment is important but secondary to this element. When Brent  is in the 30's and you need an average of 60 in 2017 and beyond, that's a big difference.  But if collectively the 14 new projects deliver as hoped or better then forward plans for projects like EA should proceed as proposed.

As some are saying, it will be what it will be, when it happens.  Not possible to make good guesses due to too many significant variables having high ranges of uncertainty.

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Messages In This Thread
Canadian firm stops LNG projects - by jft310 - 02-27-2016, 03:21 AM
RE: Canadian firm stops LNG projects - by UncleT - 02-27-2016, 03:26 AM
RE: Canadian firm stops LNG projects - by jft310 - 02-27-2016, 03:56 AM
RE: Canadian firm stops LNG projects - by jft310 - 02-27-2016, 05:55 AM
RE: Canadian firm stops LNG projects - by Stavros - 02-27-2016, 11:30 AM
RE: Canadian firm stops LNG projects - by jft310 - 02-27-2016, 01:06 PM
RE: Canadian firm stops LNG projects - by Stavros - 02-27-2016, 02:02 PM
RE: Canadian firm stops LNG projects - by Kaliboo - 02-28-2016, 01:20 AM
RE: Canadian firm stops LNG projects - by jft310 - 02-28-2016, 10:10 AM
RE: Canadian firm stops LNG projects - by Kaliboo - 02-28-2016, 01:18 PM
RE: Canadian firm stops LNG projects - by Kaliboo - 02-29-2016, 04:09 AM
RE: Canadian firm stops LNG projects - by Kaliboo - 02-29-2016, 07:31 AM
RE: Canadian firm stops LNG projects - by jft310 - 02-29-2016, 09:30 PM

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