Is LNG the panacea for Australia's natural gas?

Abstract

Australia already has abundant natural gas reserves. To what extent will LNG exports grow? What is the potential for future conventional gas discoveries? Is there a potential round of additional CBM-sourced LNG projects? Could shale gas contribute to supply? There are already a significant number of proposed LNG projects in Australia. How many more projects might emerge to add to the current tally? In the longer term, Australia has the potential to surpass Qatar as the world’s leading LNG exporter but which markets can help Australia realise that potential? With growing Asian demand for LNG, and buyers historically accustomed to oil-linked long term contracts, the prospects for LNG appear good. But are they? To what extent can growth in Asian gas demand absorb Australian LNG, which itself has to compete with other LNG projects? If Asian demand is satiated, what are the alternative markets? North America provides another potential outlet for Australian LNG exports, but how do the project economics stack up relative to Asia? Does South America offer market opportunities and if so can countries there absorb a meaningful volume of Australian LNG? A detailed consideration of project costs and the outlook for gas prices in Asia and the Americas can help shed light on this question. It can also set Australia’s LNG projects in context relative to its competitors. If LNG is not the panacea for Australia’s natural gas, will alternative monetisation options emerge, and what might they be?