Governments in recent years have been looking for ways to kick the coal habit and stimulate the economy. LNG can do both, but has it been over done?. With multiple LNG projects coming online at home simultaneously, are the economics still there?

1. Energy Policy In
Australia
WHAT DOES THE
DEVELOPMENT OF LNG
PROJECTS MEAN FOR
AUSTRALIA AND THE
INDUSTRY?

2. The Australian LNG story in a nutshell.
This story is influenced by the following:
 Position of Australia in the Asia pacific region.
 Asian demand for LNG which will continue to grow.
 The pursuit of a transition fuel.
 Lack of national development plan of petroleum
basins leading to a patchwork outcome on a state by
state basis.
 The development of other LNG projects outside
Australia.

3. How has policy affected development in Australia?
 The amount development possible and projects
executed in petroleum basins for domestic and
export, on a state by state basis varies widely due to
over regulation and lack of political cohesion.
 Development and investment into the petroleum
sector for some states, which would secure energy for
future development and growth has in some cases
been delayed.

4. Groups affected by energy policy in Australia:
Industry: Australia:
O&G Companies both
foreign and Australian
 Santos
 Origin
 Total
 Conoco Phillips
 Shell
 Woodside
Stakeholders within
Australia affected by O&G
Projects:
 Rural Communities
 Indigenous Communities
 Local and state
governments
 Environmental protection
groups.

5. How is industry affected by energy development
policy?
 By developing gas resources in the northern region of
Australia this will increase exposure to future Asian
LNG markets.
 Industry operating in states with effective petroleum
development policy can mobilise landlocked
resources, and use these as feedstock for current and
future resource projects.
 Increased revenue for companies operating in
petroleum friendly states.

6. How is the country affected by energy development
policy?
 Increased tax revenue for the country and the state.
 Growing capacity within a sector of the population to
deliver large resource projects.
 Growing resource projects will give energy security
for Australia seeing as Australia currently imports a
large proportion of its daily oil needs.
 Flow on affects of developing projects in Australia
and foreign investment.

7. What projects are currently producing
LNG?
LNG projects that are currently producing or close to
Australia:
 Darwin LNG
 Pluto
 PNG LNG
 North West Shelf Venture

8. Tonnage being brought to market by these projects:
 Darwin LNG = (3.7 MT pa)
 Pluto = 4.3 (MT pa)
 PNG LNG = (6.9 MT pa)
 North West Shelf Venture = (16.3 MT pa)
Participants in these projects:
Woodside, BHP Billiton, BP, Shell, Chevron, MIMI,
Conoco Phillips, Eni, Santos, Tokyo Eclectic, Tokyo
Gas, Oil Search, Nippon Oil, Exxonmobil.

9. Which LNG projects are being currently being built?
What is the projected completion date and tonnage
for projects currently under construction?
 Wheatstone 2016 (8.9 MT pa)
 Gorgon 2015 (15 MT pa)
 Prelude 2017 (3.5 MT pa)
 Ichthys 2016 (8.4 MT pa)
 APLNG 2015 (9 MT pa)
 Curtis LNG 2014 (8.5 MT pa)
 GLNG 2015 (7.8 MT pa)

10. Who is involved in the projects currently being built?
 Wheatstone: Chevron, Shell, Kyushu
Power Co., Apache.
 Gorgon: Chevron, Exxonmobil, Shell
 Prelude: Shell
 Ichthys: Inpex, Total
 APLNG: Origin, ConocoPhillips, Sinopec
 Curtis LNG: BG Group, CNOOC
 GLNG: Santos, Petronas, Total, Kogas

11. Contracts Vs. Spot Price?
 Long term contracts for Australian LNG have
decreased for projects under development.
 Which means that projected off take will be less at
commissioning time for the project.
 With large volumes of LNG coming onto the market,
the spot price in Asia has become so low that it has
created conditions where long term contracts are not
as attractive as once thought.

12. Who are the competition in LNG production?
 The bulk of the projects currently construction will
be commissioned in the 3-5 years.
 The USA is able to mobilise large amounts of gas and
condensate.
 The USA has for a long time had an export ban on
petroleum products, if this is relaxed this will drive
down LNG prices.
 Examples show that it has already with US gas and
condensate finding its way to international markets.

13. Who is currently buying Australian LNG from
producing projects?
Buyers of Australian LNG:
 Japan
 China
 South Korea
 Taiwan
Just to name a few.........
India is starting to take more LNG cargos, but
outdated ports and poor logistics have limited the
amount that India can receive in any given period.

14. Factors affecting further LNG projects in Australia:
 LNG promoted as a cleaner burning fuel.
 Coal over supply and thin profit margins.
 Public and political pressure on coal interests for
electricity generation.
 Increased used of gas by domestic population.
 Climate change issue front and centre.

15. Factors outside Australia affecting LNG
development:
 LNG projects being built in Asia and the US can be
built at lower costs compared to Australian projects.
 Japan bring reactors back on line for power supply.
 China and Russia striking a gas deal, which will
boost supply and protect China against price
movements.
 Spot price and contract price difference.
 Oil linked pricing for gas markets.

16. Source material/readings
 This APPEA webpage gives a snap shot of projects
and how they compare to each other:
 http://www.appea.com.au/oil-gas-explained/
operation/australian-lng-projects/
 Another source is (LNG watch channel) on youtube
which shows the connectivity of the production and
markets in the Asia/Pacific.
 Company webpages for all the current LNG projects
under construction. The webpages for all these
projects provide a wide range of info.