Australia gave environmental approval on Friday to two coal-seam gas projects worth about $30 billion, led by BG Group and Santos, but attached 300 conditions that could inflate costs. The approvals pave the way for the two companies to make final investment decisions this year, but the government's move to impose so many conditions raised some concerns.
"The issue remains whether any of those conditions are difficult or show-stoppers but you would have thought that a lot of that would have been pre-worked," said oil-and-gas industry analyst Stuart Baker of Morgan Stanley. The announcement comes as Australia's resource sector is riding a wave of investment thanks to demand from fast-growing countries in the region such as China.
BG reiterated its plan to consider a final investment decision on its project this year, while Santos said it sees no delay to its original end-year timeframe for a final investment decision. Coal-seam gas, also known as coal-bed methane, is extracted by blasting the surrounding rock with high-pressure streams of water, sand, and chemicals.