Can Australian LNG continue to be competitive?
Daniel TolemanWood Mackenzie, Level 1, 216 St Georges Terrace, Perth, WA 6000, Australia. Email: Daniel.toleman@woodmac.com
The APPEA Journal 60(2) 555-558 https://doi.org/10.1071/AJ19169
Accepted: 2 March 2020 Published: 15 May 2020
Abstract
Australian liquefied natural gas (LNG) has dominated headlines over the last decade for both good and bad reasons. But, the world that Australian LNG will face over the next decade will look very different: the energy transition will accelerate and LNG customers’ requirements will change. Industry must keep pace, as LNG is hugely important for Australia. A wave of new LNG investment is building. It is a distinct possibility that little of that capital will be directed towards expanding Australian developments. Projects in Qatar, the US, Africa and Russia are leading the charge, given their access to cheap gas and/or low construction costs. Australia has several projects vying for final investment decision. Many of these will utilise existing infrastructure, so they should be competitive. However, due to technical challenges and partner alignment issues, many projects are moving slowly and are at the wrong end of the global cost curve. Given these challenges, what can industry do to improve Australia’s competitiveness? To compete in this new environment, Australian investors need to start operating in new ways. This paper will discuss some of the key moves that companies – and other stakeholders – should consider if they want to attract investment in a hyper-competitive global environment. Is collaboration and sharing of infrastructure the answer? Do we need to see more merger and acquisition, first to unblock the log-jam and then to allow new players to unlock the commercial complexity? Are there other non-financial metrics, like carbon or green LNG, that could influence company behaviour, and therefore, give Australian projects a new edge?
Keywords: Australia, carbon, China, collaboration, commercial arrangement, company strategy, complex gas, deepwater, energy transition, green, green LNG, Japan, Korea, M&A, majors, offshore, oil prices, project delivery, project execution, subsea, tariffs
Daniel Toleman joined Wood Mackenzie’s Australian Upstream Research team in 2018 as an LNG Content Lead. During this time, his focus has been on LNG and gas monetisation, project economics, corporate strategy and industry trends. Daniel has also participated in a wide range of consulting projects, including new business development, market advisory, opportunity screenings, and cost benchmarking. Prior to Wood Mackenzie, Daniel worked at Shell Australia across a variety of planning, finance and treasury roles. Dan’s qualifications include a Certified Public Accountant (2015) as well as a Bachelor of Laws, Bachelor of Commerce and a Bachelor of Economics (Hons) from the University of Western Australia (2012). |
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