Can Australian LNG continue to be competitive?

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?