APPEA 2015: more work still needed to ensure LNG investment

Australia’s liquefied natural gas exports will continue to grow, but work needs to be done to ensure investment in the next wave of projects, Ian Macfarlane, Australia’s industry minister said on Monday.

The country’s LNG export value for the 2014-15 financial year is expected to total A$18.2 billion (US$14.6 billion), Macfarlane said at the APPEA 2015 conference.

He added that this figure is expected to grow at an annual rate of 21% to A$46.7 billion by 2019-20, with the country on track to become the world’s largest LNG exporter by the end of the decade.

While the nation still has a number of LNG projects under construction, he warned that Australia should not be complacent given the recent plunge in oil prices and the challenges that has created for the industry.

“I acknowledge the current difficult market conditions may dampen investment in new projects until there are signs of a turn in the commodity cycle,” he said.

“However, it is important we don’t overlook the ongoing growth min gas demand, particularly here in the Asia–Pacific region.”

According to Macfarlane, gas demand in the Asia-Pacific region had grown roughly 7% year-on-year in recent times and Australia was well placed to meet continued growth in the region.

However, Macfarlane acknowledged that the government needed to play its role in helping secure the next wave of LNG investment as operators looked to rein in their costs.

He said reducing the regulatory burden placed on companies was a priority for the government, noting it had already streamlined the assessment and approval process for offshore exploration.

Macfarlane claims the introduction of the National Offshore Petroleum Safety & Environmental Management Authority (Nopsema) more than a year ago as the sole environmental assessor for projects in Commonwealth waters will save industry and the community A$120 million per year.

However, he added that the government was now working on adding to Nopsema’s powers to help further remove duplication and reduce costs.

The government is also looking at policy reform, having tasked the Australian Energy Market Commission with reviewing the role and objectives of the east coast gas markets and determining whether the regulatory arrangements for pipeline capacity provide the right incentives and signals for investment in gas infrastructure.

It has also enlisted the Australian Competition & Consumer Commission to review the effectiveness of competition in the eastern gas market.

“I am confident that we have the gas resources to meet domestic demand and gain the economic benefits of exporting gas,” Macfarlane added.

Source: APPEA