Liquified natural gas (LNG) exports remain to be vital to Australia’s economic growth, according to figures by the Department of Industry, Innovation and Science’s September 2018 Resources and Energy Quarterly.
The value of Australia’s resources and energy exports exceeded $231 billion in 2017-18, setting a new record thanks in part to rapidly growing LNG export volumes, according to the figures released by the department.
Australia’s LNG export earnings increased 36 per cent to $31.7 billion in 2017-18 and are forecast to reach $48.4 billion in 2018‑19, overtaking metallurgical coal as Australia’s second largest resources and energy export.
The Australian Petroleum Production and Exploration Association (APPEA) Chief Executive Dr Malcolm Roberts said the data reinforced how critical LNG exports are to sustaining Australia’s economic growth.
“Australia’s LNG projects will deliver decades of economic growth, jobs and exports. These national benefits aside, LNG exports have regional and global environmental benefits,” he said.
“When used to replace coal, LNG cuts emissions. It also helps developing countries to reduce air pollution, a major cause of millions of premature deaths,” Dr Roberts added, “however, the economic benefits of a growing LNG industry cannot be taken for granted.”
“Australia faces intense competition from established and emerging low-cost producers in the global market. Good policy and sensible regulation are vital if Australia is to overcome these competitive challenges,” he said.
Image courtesy of Department of Industry, Innovation and Science
Summary of the September 2018 Resources and Energy Quarterly:
OIL:
- Oil prices are expected to remain around current levels over the outlook, as consumption is balanced with higher production from OPEC, Russia and the US.
- The Brent spot price is forecast to average US$72 a barrel in 2020.
- Australia’s export volumes are expected to increase from 226 thousand barrels a day in 2017–18 to 331 thousand barrels a day in 2019–20. Higher condensate output at new LNG projects is expected to support this growth.
- The value of Australia’s crude and condensate exports is forecast to increase from $7.0 billion in 2017–18 to $11 billion in 2019–20. Higher export volumes and maintained price strength are expected to contribute to this growth.
- Trade tensions and a downturn in world economic activity pose a negative risk to oil consumption and the oil price.
GAS:
- The value of Australia’s LNG exports is forecast to increase from $31 billion in 2017–18 to $48 billion in 2019–20, driven by higher export volumes and higher prices.
- The completion of the final two LNG projects in Australia’s recent wave of LNG investment will underpin strong growth in export volumes and bring total export capacity to 88 million tonnes.
- Most Australian LNG is sold under contract at prices linked to oil price movements. LNG contract prices are forecast to rise in 2018–19 before stabilising in 2019–20.
- Global LNG markets are expected to enter a short period of overcapacity between 2019 and 2020, but there are some risks associated with this.
The full report can be found here.
