Overview

Australia is richly endowed with natural resources and is a major exporter of fuels to the Asian market and the wider world. It is the world’s largest exporter of coal, the second-largest exporter 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 just beginning to develop the huge conventional reserves found off the country’s northwest coast in the Carnarvon, Browse and Bonaparte basins. The majority of gas from these fields will be exported as LNG, owing to their remote location, high development costs and relatively low domestic demand. However, the addition of CBM-to-LNG exports from three new plants in Queensland is causing the east coast’s domestic gas prices to rise, both because of tighter supply and the influence of Asian LNG prices. Both the previous Labor government and new Liberal-National government have refused to put a domestic reserves policy in place to help keep prices down.

Australia has produced CBM since 1996, but is preparing to export a large proportion of those reserves as LNG, delivering gas from the Bowen and Surat basins to three LNG plants that are set to come online between late 2014 and 2016. CBM production is facing increased opposition from environmentalists and farmers, who are unhappy about perceived environmental damage. New South Wales - which has little CBM production but needs to develop it to make up for lost imports from Queensland - has passed tougher legislation 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 United States LNG facilities.

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