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Shell backs gas export limits

: Resources reporter, Melbourne: 28 July 2017

Royal Dutch Shell chief executive Ben van Beurden has said he is very supportive of Malcolm Turnbull’s moves to impose export restrictions to increase domestic supply on the east coast, where Shell runs the Queensland Curtis LNG project.

But the oil major has revealed there have been some unspecified operational problems at QCLNG, which exports coal-seam gas from Gladstone.

Speaking on a second-quarter earnings call in London last night, Mr Van Beurden backed the Prime Minister’s intervention in the markets, which gives the government the power to restrict exports from any LNG project that is not a “net contributor” to domestic markets.

“There have been situations where projects in that market have been struggling to supply their own export schemes and effectively taking more gas out of the country than they have put into the system,” the oil boss said.

He said Shell was not part of this, with its Arrow joint venture and production from QCLNG making it a net contributor to the east coast market.

The Santos-led Gladstone LNG project is the only one of the three gas export plants in Queensland that buys some domestic market gas for its exports.

“We are very supportive of what the government is trying to do with the new policy and I believe the government is supportive of what we are doing,” Mr Van Beurden said.

Shell, Australia’s biggest LNG exporter, reported strong second-quarter net profits on Thursday, kicking off a critical round of earnings for big oil companies trying to show they have adapted to low crude prices.

It said LNG production volumes rose from a year earlier, reflecting the start of the Chevron-operated Gorgon project in Western Australia, in which Shell has a 25 per cent stake. This was partly offset by “lower feedgas availability” at its Queensland Curtis LNG project, which it acquired with its 2016 takeover of BG Group.

“We’re continuing the integration of the asset and there have been some performance issues,” Shell chief financial officer Jessica Uhl said, adding that supplying the domestic market had also reduced exports.

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