Overview

Gas is Australia’s third-largest energy resource after coal and uranium, and its share of the country’s energy production continues to grow. With seven LNG plants due to come online in the next five years, Australia is on track to surpass Qatar as the world’s largest exporter by 2020.

The country’s 24 mtpa of LNG export capacity is expected to begin growing towards the end of 2014, with the startup of the first of three CBM-to-LNG plants in Queensland. The second and third will come online in 2015. The Gorgon and Wheatstone plants in Western Australia, Ichthys in the Northern Territory and the Prelude FLNG plant off the northwest coast are all expected onstream between 2016 and 2018.

There is potential for more export projects after 2020, given the country’s vast resources. As of 2011, Australia accounted for 2% of the world’s conventional gas resources and 2.1% of production, as well as 6% of global CBM resources and 9% of production, and 5.5% of global shale gas resources. With significant exploration still under way both on- and offshore – in frontier areas such as the southern Bight Basin and mature areas off the northwest coast – developers have already proposed more than 60 mtpa of additional output from greenfield and brownfield projects.

But the future of these projects is far from guaranteed. The investment climate in Australia is cloudy – the combination of a strong Aussie dollar, high labour costs and poor productivity - as well as complicated red and green tape - have made it a much more expensive country in which to invest. Additionally, after several years of record-setting investments, many projects are reaching completion. Companies are preparing to focus on running and maintaining these facilities rather than building new ones.

The arrival of new LNG exporters such as the United States, Mozambique and Papua New Guinea is also taking attention away from Australia, as it struggles to keep its costs down. Australian exporters have so far refused to break away from the oil-linked prices they need to justify the cost of their plants. Conventional plants under construction cost roughly $3,000-3,500 per tpa of capacity, whereas the new PNG LNG plant cost $2,750/tpa, and US LNG terminal conversions are expected to cost around $1,000/tpa, if not less.

Page updated: 17/07/2014