The Oxford Institute for Energy Studies Natural Gas Research Programme has published a paper entitled The Future of Australian LNG Exports: Will domestic challenges limit the development of future LNG export capacity?
With seven new LNG projects under construction and due for completion in the 2014 – 2018 timeframe, taking into account existing facilities, Australia is expected to overtake Qatar as the world’s largest supplier of LNG by the end of the 2010s.
Track record?
With its plentiful gas reserves, prior track record of LNG project execution and operation and relative proximity to the fast growing Asian LNG markets, the degree of comparative advantage would seem to guarantee a benign investment environment.
However, several factors, among them competition for skilled labour within Australia, the strength of the Australian dollar and the specific logistical and environmental sensitivities of the project locations, have resulted in significant cost escalations and in some cases delays to the original project schedules.
LNG price dynamics
The paper serves to convey an understanding of the much overlooked Australian gas market and, significantly the impact that new LNG projects are already having on internal supply/demand – price dynamics and the political challenges raised.
Much energy media attention has focused on the problems faced by the current group of new Australian LNG projects. The new report addresses the root causes but more importantly conveys the scale of the new wave of Australian LNG supply and integrates this with its impact on the domestic market which until now, has been largely isolated from global energy dynamics.
The report can be downloaded from The Oxford Institute for Energy Studies website.
Adapted from press release by Katie Woodward