LNG exports at risk as US stakes claim
BY: MATT CHAMBERS From: The Australian January 14, 2013 - Excellent article
AUSTRALIA will be the biggest loser among liquefied natural gas exporters if US LNG production takes off in a meaningful way, with more exports displaced than any other nation because of the high costs of building new projects.
The finding, in a Deloitte report commissioned by US LNG proponent Cheniere Energy, comes as global engineering contractor KBR -- a leader in West Australian projects -- says work on US LNG projects is starting to grow as work in Australia dwindles because of surging costs.
If a substantial amount of US LNG is exported to Asia, it could displace the equivalent of one $20 billion project in Australia, the Deloitte report on the global impact of US LNG exports says.
US exports, which are being made economic by a shale gas glut, would also weigh on LNG prices.
"Australian LNG exports to Asia and Russian exports to Europe look particularly vulnerable, given their projected large volume of exports and high cost to markets they serve," the report, entitled Exporting the American Renaissance and released in the US last week, says.
"The largest LNG source that is displaced is Australian LNG."
KBR chief executive William Utt said price hikes in Australia meant opportunities for his company were falling.
"I do have some concerns about how fast are they going to move forward on additional projects in Australia," Mr Utt told investors in the US on Friday.
"Relative to a year ago, it has become much stronger for KBR in North America relative to international. We've seen significant growth on an absolute basis in North America and probably a little bit of diminution in the prospects we have internationally, largely with Africa, Australia."
In Australia, the issue has been high costs, while in Africa the early stage of the industry is making things tough.....
Sentiment: Strong Sell
IOC's world class Elk and Antelope certified gas fields cost little to get of of the ground and cost far less to ship due to proximity to Asia as compared to American natural gas.
Sentiment: Strong Buy
OZ; Everyone knows PNG and Australia are two different countries. Production costs for IOC are lower than Australia and US. What about shipping costs from US to Japan, Korea, China vs PNG?
IOC costs are lower. IOC has lower cost than both US and Australia. Africa like PNG may have lower costs. Australia being more expensive is good for IOC, so you have really made the case for IOC.
sir375201. With all due lack of respect, how do you arrive at your assertion that PNG has "lower costs". There is no LNG operating history in PNG whatsoever. The PNG LNG project has already announced huge cost overruns. When you do your insane "calculations" do you factor in the lack of skilled labor and the costs of importing it and housing it? Do you factor in the costs of SECURITY? How about the lack of local infrastructure? Does that make it more or less expensive to develop?
You're just making it up as you go along. PNG has to compete head to head with Australia, they both are selling into the same markets.
Sentiment: Strong Sell