The land of plenty—realising Australia's gas assets

Abstract

In recent years Australia has emerged as an investment area of choice for finding and developing gas. From an investor perspective, its attractions include an open investment regime, low political risk, a relatively high-value domestic market, and great prospectivity including a choice between conventional offshore developments or emerging onshore coal seam gas opportunities. A differentiating factor from many other gas exporting countries is its relative lack of oil—indeed, it is not subject to the production quotas of OPEC countries. The appetite for investment from domestic and international players presents Australia with several important policy decisions that include: Depletion policy—how fast should Australia convert the value of its gas from molecules in the ground to cash? Home or abroad?—how much natural gas should be exported and how much to develop local industry? Pricing policy—what is a fair pricing policy that helps the country benefit from its natural endowment without wasting it? Domestic versus international technology—what is the correct balance between relying on the best available international technology and prioritising use and investment in domestic technology? Fiscal terms—how can Australia both encourage development and not give away unnecessary value to private investors? These principal policy decisions will be discussed with consideration of the strategic choices made by other gas-rich countries including Egypt, Norway and the United Kingdom.