BREE Says Australian LNG Exports to Reach 79 Mln Tonnes by 2019

Australia’s resources and energy commodity export earnings are forecast to increase at an average rate of 8 per cent a year from 2013–14 to total $284 billion in 2018–19 according to the Resources and Energy Quarterly–March Quarter 2014, released by the Bureau of Resources and Energy Economics (BREE).

“Higher export earnings will be driven by the substantial growth in volumes of a number of commodities despite near term softness in prices” said Bruce Wilson, Executive Director of BREE.

“In Australia, the resources boom is transitioning from the investment phase to the production phase as the large number of projects developed over the past few years start operation. This is expected to result in increased production and exports for a number of commodities. Lower prices for most commodities over the past year have put greater pressure on the profitability and competitiveness of some Australian producers. However, the Australian industry is expected to remain fairly resilient over the medium term.”

“In the short term, higher volumes of iron ore and coal will be the principal drivers of export growth. As new LNG production capacity comes online over the outlook period, LNG exports will increase to become one of Australia’s principal exports and support further growth in export earnings” Wilson added.

Between 2012–13 and 2018–19, LNG exports are projected to increase at an average annual rate of 22 per cent to reach 79 million tonnes, up from 24 million tonnes in 2012–13. Iron ore will be the second largest contributor to higher export revenue over the medium term. Exports are projected to grow at an average rate of 8.2 per cent a year to total 847 million tonnes in 2018–19, more than 300 million tonnes higher than in 2012–13. Coal exports volumes are also projected to increase over the medium term. Thermal coal and metallurgical coal exports are projected to grow at 5.1 per cent and 3.8 per cent a year to total 244 million tonnes and 181 million tonnes, respectively, in 2018–19.

In line with higher LNG exports, the value of energy exports is projected to increase, in real terms, across the outlook period to total $119 billion in 2018–19. The value of resources exports, in real terms, is projected to peak in 2016–17 at around $136 billion primarily as a result of an expected further moderation in iron ore prices.

A key uncertainty over the projection period is the prospects for Arrow Energy’s LNG plant. Arrow, a joint venture between Shell and PetroChina, has sizable CSG resources of around 25 billion cubic meters. The company has been cautious in recent months about the prospects of developing their own LNG plant to draw on those resources (a FID was pushed back again in January). Arrow currently produces around a billion cubic meters of gas a year for domestic use but may consider selling into existing LNG projects in the future rather than developing their own LNG facilities.