THE next two years will be transitional ones for Origin Energy as LNG production begins on Curtis Island, managing director Grant King has told shareholders at the company's annual general meeting.
Speaking at the meeting in Sydney on Wednesday, Mr King said good progress had been made, with the Curtis Island, Gladstone part of the Australia Pacific LNG project now 82% complete.
All modules for Train 1 were set and all remaining Train 2 modules were expected to be set before the end of the year, he said.
Both LNG tanks had been hydrostatically tested, confirming structural and pressure integrity.
The loading platform for the LNG jetty had been completed. Piping and cable installation also progressed, as did preparations for commissioning activities.
Mr King said the outlook for growing demand for Australian gas was strong, particularly for LNG export from emerging hubs in Gladstone, Darwin and the north-west of Australia.
"The timing of other projects starting in this period is as important to Origin as is the start of LNG production by APLNG," Mr King told shareholders.
"In respect of APLNG, progress remains good, and it is still Origin's expectation that LNG production will begin in mid-2015.
"The timing of other projects starting, particularly QCLNG, may affect Origin in a number of ways.
"APLNG will benefit from its share of QCLNG production, but if production is delayed then this benefit will be diminished in the 2015 financial year."
Mr King said a delay could result in additional ramp gas in the market at temporarily lower prices, which Origin could buy for its energy markets business and benefit accordingly.
"In order to benefit from this opportunity, Origin will reduce its call on production from its upstream business and bank contracted gas this year, and call for that gas in the following years when it is more valuable," he said.
"This opportunity, together with scheduled shutdowns and recent falls in oil prices, will see upstream's contribution to earnings significantly lower this year."