Overview

Australia is richly endowed with natural resources and is a major exporter of fuels to the Asian market and wider world. Australia is the world’s largest exporter of coal, the second-largest of uranium and it is set to compete with Qatar for the title of world’s largest exporter of LNG by 2020. The country has huge amounts of conventional gas, estimated at 2% of world reserves and vast resources of unconventional gas.

Australia is only beginning to develop the huge conventional reserves found offshore to the northwest of the country in the Carnarvon, Browse and Bonaparte basins. The majority of gas from these fields will be exported as LNG because of their remote location. The high cost of developing these fields and building LNG facilities has caused domestic gas prices to rise and the federal government has refused to put a domestic reserves policy in place to help keep prices down.

Australia has produced coal seam gas (CBM) since 1996 and is making use of significant reserves in Queensland to supply the eastern gas market, as conventional onshore reserves decline. In addition to the domestic market, gas from the Bowen and Surat basins will supply three LNG plants set to come online in 2014 and 2015. Production of CBM is facing increased opposition from environmentalists and farmers unhappy about perceived environmental damage. The state has passed tougher legislation in response, making it more difficult for companies to start drilling.

The simultaneous development of a large number of LNG projects has caused the cost of labour, materials and contracting services to soar, and the remote locations of the fields only add to the cost. As a result, a number of the LNG facilities have been delayed and gone over-budget. The lucrative Asian market should allow a solid return for the large capital outlay; however, Australia could face competition from North American shale gas if export permits are granted to US LNG facilities.

Profile first uploaded: 18/10/2012
Profile last updated: 16/04/2013