According to Dr Bethune, Australia is currently the “world’s LNG supermarket” with more than 15 projects currently proposed for development. And with eight LNG projects already likely to be under construction by the end of 2011, Australia is already undertaking what Dr Bethune referred to as a “huge development program by world standards”.
These developments alone will drive massive growth in gas production, which is expected to triple to over 6,000 petajoules in the next decade, said Dr Bethune.
“In terms of LNG development, Australia is definitely having its moment in the sun as the world’s LNG supermarket. However this won’t last forever, with proposals to export LNG from the United States and Canada gaining momentum,” he said.
“Locking in as many Australian projects as possible is essential while conditions are favourable.
“The huge development program being undertaken in Australia comes with many benefits, both for Australia and its Asian customers.
“When the current eight projects are completed, Australia will be supplying 10 per cent of China’s gas needs, 30 per cent of Japan’s needs and 30 per cent of Korea’s needs, with major economic and environmental benefits for those countries.
“LNG will join iron ore and coal as a third world-leading Australian commodity export.
“The value of LNG exports is expected to grow from around $A10 billion per annum now to over $A40 billion.
“However, executing these projects has many challenges, including costs, resources, changing government policies, natural disasters and local politics.
“Eight projects is more than has ever been attempted in one country before, and there are yet further projects in the queue.”
Dr Bethune said some projects were already behind schedule and over budget. The challenges are unlikely to be “deal breakers” individually but cumulatively are likely to lead to delays, higher costs and lower profitability, he said.
Dr Bethune also said major domestic gas buyers also face challenges, of higher gas prices, difficulties in obtaining contracts and changing patterns of gas demand.
“It’s a brave new world for domestic gas, which is facing the triple whammy of LNG, higher costs and climate change policies, all at the same time,” he said.
“Some major domestic gas buyers have protected themselves against these changes with long-term gas purchase contracts and/or vertical integrating by taking interests in gas fields – however, other users are more exposed.”
