Lion Energy sees more oil and gas value
Lion Energy’s latest strategic review confirmed that the company will abandon its hydrogen initiatives and concentrate on oil and gas operations, a shift driven by a slowdown in the Australian green‑hydrogen market.
Hydrogen project scrapped amid weak demand
The decision follows a two‑year decline in commercial support for green hydrogen production and refuelling. Across the sector, many projects have been delayed or cancelled as investors, including billionaire Andrew “Twiggy” Forrest, reassess economics and capital allocation.
At the proposed Port of Brisbane hydrogen project, capital costs have stayed high while customer uptake, policy backing, and market incentives have progressed more slowly than anticipated. The expected surge in hydrogen fuel‑cell vehicle adoption never materialised, prompting partners to halt the next project phase.
With development partners withdrawing, the board deemed the venture commercially unviable. The lease obligations at the port have now ended, and equipment slated for hydrogen production and refuelling will be sold for approximately A$400,000. This sale is intended to preserve capital for the company’s core activities.
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Oil and gas exploration takes centre stage
Lion Energy, listed on the ASX under the ticker LIO, is turning its attention to the upstream oil and gas portfolio, led by the Bula Karang‑1 well in the East Seram Production Sharing Contract (PSC) offshore Indonesia.
The well is scheduled for a spudding‑in‑July‑2026 operation, which the firm says could serve as a near‑term catalyst given strong oil prices. It targets an exploration potential of about 12 million barrels of oil in the region.
In the East Seram PSC, the company holds a 45 % working interest while its farm‑out partner covers 88 % of the costs. Nearby major operators include Shell, Woodside, ConocoPhillips and PetroChina, reflecting a competitive environment.
Industry observers note that the shift mirrors a broader trend where firms prioritise assets with clearer cash‑flow prospects. The oil‑focused strategy aligns with historical strengths and may appeal to shareholders seeking more predictable returns.
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From a longer‑term view, the move resembles past pivots when market conditions for emerging energy technologies turned uncertain. Earlier periods saw firms reduce exposure to underperforming renewables, and now the focus returns to conventional hydrocarbon assets that still dominate global energy supply.
While the hydrogen exit trims diversification, Lion retains several non‑hydrogen assets. It has previously secured development approval for the Brisbane project, a long‑term lease, and joint agreements with Samsung C&T Corporation and DGA Energy Solutions Australia, all of which contributed to a solid foundation for the now‑abandoned venture.
By selling the hydrogen equipment, the company expects to free up funds for the Bula Karang‑1 well and other oil‑focused initiatives. Leadership says the decision reflects prudent capital management, aiming to allocate resources to opportunities that can deliver superior risk‑adjusted returns.
The strategic review marks a retreat from hydrogen amid a sluggish market, while reinforcing commitment to upstream oil and gas projects, notably the upcoming Indonesian exploration well.
