Fast Market Research recommends "Australia Oil & Gas Report Q1 2014" from Business Monitor International, now available
Boston, MA -- (SBWIRE) -- 01/01/2014 -- Australia is on track to becoming the world's largest liquefied natural gas (LNG) exporter by the end of our forecast period in 2022, surpassing Qatar as a series of major projects come online. However, the spiralling costs of LNG projects will most likely slow the momentum in further expansion of Australia's LNG export capacity. Gas production and consumption growth could be further threatened by increasing rules on the extraction of coal bed methane. The country will also have to contend with a growing reliance on oil imports as domestic crude oil production declines while refining outlook appears increasingly bleak in face of regional competition.
The main trends and developments we highlight for Australia's oil and gas sector are:
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- Our forecast for gas production is 123.8bcm by 2017, up from 48.2bcm in 2012. This growth will be brought about by the development of gas fields that will come online alongside the completion of LNG projects. We expect about 75% of this gas to be exported as LNG, largely to Asian customers. By 2022, gas production is forecast to hit 148.4bcm, with LNG exports surpassing 100bcm.
- However, further expansion of liquefaction capacity - and consequently exports - could be held back. Spiralling developments costs, owing to a shortage of skilled labour and a strong Australian dollar, together with an expected loosening of the global LNG market as more supplies come online, could worsen the economics of LNG projects in Australia.
- New oil is not likely to flow fast enough to make up for declining production in the country's ageing fields. Total liquids output (excluding refinery gains) fell slightly to 484,200b/d in 2012, according to the US EIA. However, the start-up of gas projects from LNG developments from 2014 should slow the rate of decline, as a result of associated liquids and condensate output. We expect total liquids output to fall to 477,200b/d by 2017 and 476,900b/d by 2022. Further oil discoveries and possible development, particularly in the Cooper Basin, and production from liquids-rich shale pending further exploration could pose upside risks to our oil production forecasts.
- The refining environment remains weak in Australia. Shell's 79,000b/d Clyde refinery in Sydney will close in September 2012, while Caltex announced that it will shut down the Kurnell refinery - Australia's second largest with a capacity of 124,500b/d and also located in Sydney - in the second half of 2014. Shell also announced that it is selling its Geelong refinery in April 2013. The age, small size and relatively low complexity of the country's refineries has rendered them uncompetitive against regional counterparts.
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