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Report highlights need for LNG expansion

LNG Industry,

Manufacturing companies in Australia have released the findings of a new report, which shows that thousands of manufacturing jobs could be lost if the domestic need for LNG is ignored.

The report, Gas Market Transformation – Economic Consequences for the Manufacturing Sector, shows more than 14,000 jobs could be lost from the sector by 2021 if gas prices continue to rise and exports increase. It brings to light major impacts on the Australian manufacturing sector from LNG export growth, forecasting a loss of national manufacturing output of approximately AU$ 118 billion by 2021 in net present value terms.

Remove regulatory restraints

The APPEA has welcomed the findings of the independent study undertaken by Deloitte Access Economics, highlighting the urgent need to remove regulatory constraints and increase production of natural gas across eastern Australia.

The industry groups commissioning the report have warned that increasing natural gas supply combined with downward pressure on gas prices is critical to the competitiveness of manufacturing. It is also evident that gas customers no longer consider gas reservation policy to be a credible solution to the challenges faced.

Impact on gas supplies

APPEA has emphasised that state government restrictions on industry activity will impact on gas supplies. The association stressed that “it is encouraging that customers now both recognize and are advocating for the removal of artificial supply restrictions.”

The report also highlights the enormous economic benefit associated with the continued expansion of Australia’s LNG industry. Australia currently has AU$ 200 billion worth of projects under construction, and the country is set to be the world’s largest exporter of LNG by 2018.

Rising LNG prices

Commenting on the findings, Innes Willox, CEO of the Australian Industry Group, said that rising LNG prices are affecting manufacturing companies that use gas, and that a significant portion of job losses could be in Queensland.

“It’s very important for Queensland industry that this issue be resolved. Queensland does benefit of course from the export of gas but on the flipside, there will be some quite severe domestic consequences for industry unless there’s a policy change.

“That will lead to the potential for shortages of gas within Queensland and Queensland as a result will lost about AU$ 30 billion out of its manufacturing sector by 2021 unless there is some policy change and we get more gas on the market and a clearer market for gas.

“What we’re looking at are significant job losses, we estimate nearly 15,000 jobs to be lost, significant decrease in output from key sectors of the economy, manufacturing in particular, mining and agriculture as well and that’s going to mean that our economy is going to become even further unbalanced.”

Industry groups

The report was commissioned by the following:

  • The Australian Industry Group
  • The Australian Aluminium Council
  • The Australian Food and Grocery Council
  • The Australian Steel Institute
  • The Energy Users Association of Australia
  • The Plastics and Chemicals Industries Association

Edited from various sources by Katie Woodward

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