Media release

New research: Australia’s “golden era” of gas a dud for shareholders

The Australasian Centre for Corporate Responsibility​ (ACCR) has today released financial modelling that shows Australia’s much touted wave of LNG projects did not generate value for shareholders.

The report, “Australia's LNG growth wave - did it wash for shareholders?” examined the eight LNG projects that reached Final Investment Decision (FID) between 2007 and 2012 - projects responsible for Australia being one of the top three LNG exporters in the world.

The analysis shows that collectively these projects eroded US$19 billion of shareholder value. Every one of the eight projects ran over budget and behind schedule.

This ‘LNG growth wave’ attracted massive investment and now generates significant revenue for company coffers. However, shareholder value is only created when a company generates returns over and above its cost of capital.

Key findings include:

  • Australia's LNG growth wave appears to have eroded US$19 billion of shareholder value - with returns not meeting the cost of capital.
  • Every project exceeded the capex guidance provided at FID, by an average of 35%.
  • Every project started production later than the schedule guidance provided at FID.
  • ACCR estimates these projects achieved Internal Rates of Return (IRR) of between 3% and 10.5%, with the Gorgon Project the only project to exceed 10%. No project met the hurdle rates that European and US oil and gas majors currently expect.
  • The failure of the Australian LNG industry to deliver shareholder value requires scrutiny from investors as the industry seeks to progress new projects. The LNG growth wave came online during a period the IEA dubbed in 2011 the “golden age of gas”. However, the IEA is now  projecting that gas demand peaks in every one of its scenarios by 2030, and Australian gas production reduces by 60% by 2050 if countries meet their climate targets.

Commenting on the findings, Alex Hillman, Lead Analyst at the Australasian Centre for Corporate Responsibility, said:

“Australia’s LNG industry has consistently overpromised and under-delivered.

“When we look at the wave of LNG projects that made Australia the biggest LNG exporter in the world, they’re generating revenue, but they are not meeting the cost of capital. In simple terms, these projects have lost shareholders’ money.

“Despite these companies touting their robust contracting strategies and cost contingencies, every one of these projects was over budget. Every project was also late.

“Out of the eight projects, only one achieved an Internal Rate of Return over 10%. None of them met hurdle rates that European and US oil and gas majors currently expect.

“With renewables now the cheapest form of energy and countries ratcheting up their climate commitments, it’s only going to get harder to develop a profitable oil or gas project. But Australia’s LNG growth wave showed that even in boom times, these projects can erode significant shareholder value.

“As Woodside and Santos seek to expand in Australia, Senegal, Papua New Guinea and Mexico with new projects, investors should be casting a critical eye over their plans and calibrating these with how their previous investments have panned out.

“This analysis demonstrates that pursuing new LNG projects can be a genuine risk to shareholder value. Rather than doing what they have always done, it is incumbent on the boards of companies like Woodside and Santos to ensure that all avenues to optimise value are considered.

“Previously released ACCR analysis has determined that at Woodside, returning capital to shareholders presents greater upside than pursuing its growth portfolio.”


In August 2023, ACCR published Woodside’s growth portfolio: what’s in it for shareholders?, a risk-adjusted financial analysis of Woodside’s growth portfolio, showing that the company’s portfolio of unsanctioned oil and gas projects does not appear to be a material source of value for shareholders, and that reallocating the capital earmarked for these projects towards a share buyback offers more value and less risk than delivering them.

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