Wood Mackenzie’s Australasian upstream 2021 outlook report shows at least US$11 billion of gas projects poised for FID in 2021.

With LNG backfill as the focus, these projects include three upstream FIDs – Mitsui’s Waitsia, Santos’ Barossa and Woodside’s Scarborough – and the AIE Port Kembla LNG import terminal which will supply the East Coast market.

Wood Mackenzie senior analyst Daniel Toleman said: “After doing everything possible to tighten belts this year, Australian operators will open their wallets and start spending. The backlog of FIDs will begin to clear as a fresh round of projects are sanctioned. But for this to occur, there has to be continuing improvement in the macro-environment and prices trending up.”

The first cab off the rank is expected to be Waitsia, located in the Perth basin. The project will export LNG from the North West Shelf with production starting in late 2023. Next, Santos is expected to sanction the Barossa gas project late in 2Q21, despite its new carbon targets and the gas’ high CO2 content.

Woodside is likely to sanction the Scarborough to Pluto project.

Toleman said: “Woodside will sanction the project without contracting any additional LNG, taking on exposure to the spot LNG price. This is a bold strategy which allows them to take advantage of strengthening near-term market fundamentals.”

Wood Mackenzie also expects AIE to sanction the Port Kembla import terminal to supply the East Coast market.

LNG imports will become the marginal cost of supply and domestic prices would rise as they move towards global LNG prices, including the cost of regasification. This is positive news for upstream players with uncontracted gas.

While corporate spending could see an uptick, signs are less clear in the M&A market. Wood Mackenzie expects at least one significant LNG or infrastructure asset to change hands.

As international oil companies and the Majors exit the market, there will be opportunities for local players to take up bigger roles in the country’s upstream industry.