BREE: Investment in Committed Resources and Energy Projects at Peak (Australia)

The stock of investment in committed resources and energy projects remained at about $268 billion according to the Resources and Energy Major Projects – April 2013, released today by the Bureau of Resources and Energy Economics (BREE).

The number of projects at the Committed Stage has decreased to 73 in April 2013 as a result of 21 projects being completed in the period. Of the 73 projects still under construction, 40 are minerals projects, 18 are gas and petroleum projects, and 15 are infrastructure projects.

“High value projects continue to be the main driver of the record high levels of committed investment in the resources and energy sectors. Mega projects valued at over $5 billion account for around 80 per cent of the $268 billion in committed investment” said Professor Quentin Grafton, Executive Director and Chief Economist at BREE.

“The decline in the number of committed projects reflects the emerging trend for high value projects at the Feasibility Stage to be delayed or cancelled, while the value of committed investment has remained close to record high levels due to cost increases to several key projects”.

BREE estimates that around $150 billion of high value projects have been delayed or cancelled since April 2012, while cost increases to committed projects currently account for 11 per cent of the stock of committed investment.

BREE, for the first time, has undertaken a forward projection of the stock of committed investment in the resources and energy sectors.

In a scenario based on projects that BREE assess as ‘likely’ to progress, the stock of committed investment has peaked and is projected to decline over the next five years as a result of fewer high value projects progressing through the investment pipeline to offset the completion of the LNG projects that are currently under construction.

“While BREE projects a likely decline in the stock of committed project investment, there remain opportunities for Australia to generate a higher level of committed investment,” said Professor Grafton. “This will only be realised if many of the projects which BREE currently rate as ‘possible’ are able to progress through to the Committed Stage over the next five years”.

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LNG World News Staff, May 22, 2013; Image: BREE