Poisoned Arrow: Gas producer takes big hit as oil price fuels slump

Coal seam gas company Arrow Energy has reported another staggering $600 million loss as it embarks on its $10 billion Surat expansion.

May 24, 2021, updated May 24, 2021
Treasurer Jim Chalmers fears rising power prices, particularly gas, will send many businesses to the wall. (File image)

Treasurer Jim Chalmers fears rising power prices, particularly gas, will send many businesses to the wall. (File image)

The company, jointly owned by Shell and PetroChina, has also reported a writedown in asset value of $1.169 billion.

Arrow said its 2020 result reflected the ongoing operation of its existing gas supply and electricity-generating businesses and the beginning of project execution on the first phase of the $10 billion Surat gas project.

It also said it was affected by the work being done to “create further, investible project proposals on its tenure in both the Surat and Bowen basins of Queensland”.

“The $1.169 billion in impairment losses was primarily from the effects of the COVID-19 pandemic on prices and demand for gas and electricity,” Arrow said in a statement.

“In the year ahead, we will continue to deliver the first phase of the Surat Gas Project, work on engineering definition and planning to create further, investible project proposals, and operate our gas supply and electricity generating business.”

The company owns gas-fired power stations and five gas fields in the Bowen and Surat basins and is a major supplier of domestic gas.

Arrow also reported a loss of $866 million in 2019. Almost $9 billion has been lost by the company since 2010.

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The result adds to a long list of financial problems for the sector which has never risen to the promise it made when it won its State Government approvals in 2010 and 2011.

Last year, Origin Energy reported a $720 million writedown of its APLNG joint venture.

Santos, which has been troubled from the start by a lack of gas, has also had a series of writedowns. Shell also announced in July that it would writedown asset values by $11 billion, mostly on its Queensland coal seam gas company, QGC and the Prelude floating LNG project.

Last year Arrow Energy approved the development of its $10 billion Surat Gas project which will include 600 coal seam gas wells in its first phase and is expected to deliver its first gas this year

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