APPEA: Australia to Dominate Regional LNG

Source:

"Australia may surpass Indonesia and Malaysia as world's leading LNG exporter."

Australia is shaping up to dominate the Asia-Pacific region's supply of LNG, according to Adi Karev, global head of oil and gas for Deloitte Touche Tohmatsu.

Addressing the Australian Petroleum Production & Exploration Association conference in Brisbane, he said Australia may surpass Indonesia and Malaysia as the world's leading exporter of LNG from 2010 and beyond.

"Australia is well-placed to play an important role in the paradigm shift from west to east because of its geographical location and the rapidly expanding LNG sector," he said.

But Karev said the country faces challenges in four areas: access to resources including human capital, demand saturation, a supply glut and project-cost overruns.

Competition for engineers, project managers and geologists will intensify, he said, while project finance and raw materials will be strained by competition from other large projects.

Karev noted the effort by China to raise the gas share of a rapidly growing energy market that is shifting the center of global demand eastward.

"China is forecast to overtake the U.S. soon after 2025 to become the world's largest spender on oil and gas imports," he said. "In addition, India is expected to surpass Japan to become the third largest importer globally."

Another speaker assessing Australia's predicted dominance of LNG and natural gas reserves was John Harris from Cambridge Energy Research Associates.

Harris pointed out that Australia's growing number of LNG projects has the potential to oversupply Asia-Pacific markets.

Harris said a shakeout and delays are inevitable. In addition, there are other producers–notably in the Middle East and even North America–whose supply might swing into Southeast Asia and meet some of the expected demand, creating competition for Australian projects.

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