Shell Scraps $4.6 Billion New Build Orders

Published at 11:57AM - 29/04/16

Shell has scraped $4.6 billion of orders for three new build offshore FLNG facilities, according to ship builders Samsung.

Samsung Heavy Industries (SHI), was awarded the three orders back in June 2015, however a filing at the Korean stock exchange showed the order to be cancelled.

Three New Offshore Assets

The three new floating liquefied natural gas (FLNG) facilities, were to be built along the same lines as Shell’s giant Prelude FLNG, itself currently under construction at Samsung’s Geoje shipyard.

All three new build vessels were destined for the Browse development offshore Western Australia. The development was in its pre-engineering phase, with much of the front end engineering and development (FEED) work already undertaken and completed.

However the development’s operators, Woodside Energy, announced back in March that it had put the development on hold indefinitely, citing the ongoing slump in market prices as the major factor.

Browse Development Cancelled

A statement from Woodside at the time read: “While significant progress was made to improve project value, this has been offset by an extremely challenging external environment.”

“Woodside remains committed to the earliest commercial development of the world-class Browse resources and to FLNG as the preferred solution, but the economic environment is not supportive of a major LNG investment at this time.”

Shell Cancels $4.6 Billion Build Contracts

Today’s announcement is yet another grim reminder of the current state of the global oil and gas industry, and that even through the long-casting foresight of the world’s supermajors, things aren’t looking to get better any time soon.

Browse LNG Partners

The Browse development is a joint venture between Woodside Energy; Shell; BP; Japan Australia LNG and PetroChina.