re: Cornerstone article, page-5

BUSINESS

Gas shortage hurts Incitec

• BY GREG ROBERTS
• AAP
• JULY 08, 2015 4:17PM

INCITEC Pivot chief James Fazzino's long running warnings about a gas supply crunch hurting his industry have partly come true with the company flagging a profit downgrade.
THE explosives and fertiliser maker said it faced a hit to net profit of up to $22 million over the next 12 months.
A steep cut of 10 to 20 per cent in gas supplies used to power its Queensland Moranbah ammonium nitrate plant was expected.

Incitec is supplied by Arrow's Moranbah Gas Project - a Shell and Petrochina joint venture - which is one of Australia's largest coal seam gas fields.

If there was a sustained and consistent 20 per cent fall in gas supply over the next 12 months, it's net profit could suffer a $22 million hit, including $6 million this year, the company said.


Incitec said Arrow had told it it was confident of improving production from its new wells.

The company's shares fell 10 cents, or 2.6 per cent, to $3.71.

Australia's rapidly growing liquefied natural gas industry is expected to eventually be a major export earner that rivals iron ore.

But that is not welcomed by executives at manufacturing companies such as Incitec's Mr Fazzino and Dow Chemical's Andrew Liveris, who warn the Australian economy is worse off when industry suffers a gas shortage or soaring prices while the local resource is exported.

Gas powers their manufacturing plants.

Mr Fazzino has called for government policies supporting more gas projects and more suppliers and has criticised global giant Shell's takeover of BG, which controls much of Queensland's gas.

CLSA analyst Scott Hudson said the predicted impact of the gas shortage on Incitec's profit was relatively minor at below five per cent, but it did highlight risks facing the industry around gas shortages.

CNX HAS THE ANSWER. Take note Qld Government decision makers.