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雷达卡
Oil & gas sector
A review of the potential impact of an Emissions
Trading Scheme
Energy
Mark GreenwoodAC
(61-2) 9220 1563
mark.j.greenwood@jpmorgan.com
Benjamin Wilson
(61-2) 9220 1384
benjamin.x.wilson@jpmorgan.com
Dale Koenders
(61-2) 9220-1579
dale.j.koenders@jpmorgan.com
J.P. Morgan Securities Australia Limited
See page 27 for analyst certification and important disclosures, including non-US analyst disclosures.
J.P. Morgan does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may
have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their
investment decision.
Figure 1: CY09E emissions intensity
(t CO2e/kboe)
0
20
40
60
80
AOE
WPL
OSH
AWE
ROC
BPT
STO
Source: J.P. Morgan forecast
Figure 2: CY09E emissions
(mt CO2e)
0 1 2 3 4
ROC
OSH
AWE
AOE
BPT
WPL
STO
Source: J.P. Morgan forecast
• In May-09, the government released the revised Carbon Pollution Reduction
Scheme (CPRS) bills which included 1) a 12 month deferral of the
introduction to 1-Jul-11, 2) a fixed permit price of A$10/tonne for the first
year, 3) an indexed price cap (A$40/t) for the following four years, and 4)
an increased number of free permits for emissions-intensive trade exposed
industries. The Australian Senate is expected to begin debate on a CPRS
when it returns to office Tuesday 11th August, with a vote as early as
Thursday. While a CPRS may not be passed by the Senate until early 2010,
we expect a CPRS will be enforced in some form by mid CY11. We now
include the impact from a carbon charge in our base case valuations,
commencing at A$10/t in year 1 then increasing to an estimated A$20/t
thereafter.
• We have evaluated the potential effect of the CPRS on oil, gas, and LNG
projects under our coverage. Santos’ Kipper and Cooper Basin projects have
the greatest sensitivity to an introduced carbon charge due to the high level
of carbon dioxide in the reservoir gas, while not benefiting from free credits
under the CPRS. A relatively onerous A$40/t carbon charge would reduce
project DCFs by 20% and 6% respectively. In comparison, a similar carbon
charge reduces LNG project valuations by approx. 1-3%, mitigated by the
60% free carbon credits proposed by the government to appease the oil &
gas sector.
• The financial impact of a modest A$20/t carbon charge (our base case) is
relatively minor on company wide valuations. We estimate DCF reductions
of only 2% for STO, 1.6% for AOE, 1.4% for BPT, 0.7% for ROC, 0.7% for
AWE, 0.7% for WPL, and no change for OSH given its assets are in PNG.
With increasing investor focus on ESG issues, however, we believe that
emissions intensity will come under greater scrutiny. Santos, Beach and Roc
have the greatest current level of emissions per unit of production as shown
in Figure 1. Santos’ DCF has high leverage to a carbon charge given the
high CO2 emissions from the Cooper Basin (which unlike the LNG projects
does not receive any free credits), and also the surprisingly high carbon
intensity of the GLNG project given the 5-9% upstream gas use.
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