The high-profile dropout was obviously the well-telegraphed decision by Oil Search to scrap its plan to build a pipeline linking Papua New Guinea with Australian markets.
The lower profile development was news from Origin Energy that it’s still having trouble with its BassGas project – but with the possibility of more bad news to come as a controversial arbitration process to resolve construction disputes moves into its final phase.
Slugcatcher, always wary of predicting what might happen in a legal process, will not say which way the BassGas dispute seems to be heading, though it is worth noting a fresh spring in the step of the chaps in charge of Clough Ltd, the engineering firm kicked off the job.
More on BassGas later. First the PNG project which, as readers might have noticed in prior ramblings, has not been one of The Slug’s favourite projects.
Surplus energy down Australia’s east cost, especially from abundant coal supplies and now from rising production of coal seam methane, was always the biggest hurdle for Oil Search’s ambitious plan because the surplus meant low energy prices.
Compounding the problem of the PNG pipeline was the question of security of supply, a subject treated almost as taboo by industry and governments alike because it might reflect badly on the way law and order operates in PNG.
With no apology to anyone, Slugcatcher reckons the security aspect was always going to be a major obstacle to a pipeline project in a country which struggles to govern itself.
Whatever Oil Search eventually does with its PNG gas, anything would be better than the pipeline to Australia.
Meanwhile, far to the south, there are signs emerging that Origin and Clough are getting closer to a settlement, which might lean more in favour of Clough than Origin.
For anyone who has not followed this saga here is a potted history. Origin, and partners, became a little upset a couple of years ago with construction progress (and costs) on the BassGas project which delivers gas from the Yolla field to east coast customers.
In fact, Origin became so upset that it alleged there were “defects” in the work, dismissing Clough and taking control of the job. That, naturally, led to series of legal actions which eventually headed into an arbitration process led by Professor John Uff.
Officially, the BassGas dispute remains locked inside the arbitration dispute with a decision expected to be handed down sometime in the next couple of months, and perhaps sooner.
Once the umpire’s ruling is received either Origin or Clough could take the matter to a second round of hearings in late 2007.
But, and this is the interesting bit, Clough is effectively under new management, with David Singleton replaced last month by John Cooper as chief executive of the Perth-based engineer.
The changeover was sudden and appears to be part of a process by which Clough’s biggest shareholder, South African construction business Murray & Roberts, is taking a firmer hand at Clough.
Cooper, in his first media interviews, has given little away regarding the BassGas dispute, but he is exuding an air of confidence.
This is to be expected from a new CEO, but the confidence shown by Cooper goes beyond the normal, especially when he smiles broadly when questioned about BassGas and repeats an answer that he is “eagerly awaiting” the arbitration decision – and his grin gets even wider.
The Slug might be reading too much into body language, and in the way in which a few words are delivered, but it is hard to not come away with a feeling that either a resolution of the BassGas dispute is in the air, or Clough has picked up positive signals during the arbitration process.
For Origin, given that it’s still having problems at BassGas, the atmosphere at Clough is somewhat ominous.
