LNG up to the task of taking on international competition

The QCLNG project on Gladstone's Curtis Island.
The QCLNG project on Gladstone's Curtis Island. QGC

AUSTRALIA'S LNG projects will be able to handle increased competition in the international market, former resources minister Martin Ferguson told a conference in Adelaide on Wednesday.

Mr Ferguson, who has been appointed chairman of the Australian Petroleum Production and Exploration Association advisory board, said this was no time for pessimism about Australia's prospects.

Speaking at the APPEA's Onshore Gas Conference, he said Australia had good resources and a strong track record.

"All we need is the will to address our disadvantages. We must learn from past experience - from successes and mistakes."

Mr Ferguson said the potential to safely and sustainably develop gas resources while securing significant economic benefits remained enormous.

On the challenges facing the industry, he said relationships must be built between policymakers, industry and the community that helped secure affordable supplies of gas to meet the needs of local and international markets.

"As onshore gas operations expand, industry and government must engage our communities and bring them with us," he said.

"Both industry and government have important obligations. Industry must commit to establishing and maintaining social licence.

"Governments must commit to strong and transparent regulation based on science and rationalised approvals processes that deliver good environmental outcomes.

"Only by doing both can we sideline opponents and ideologues and increase the industry's competitiveness."

Mr Ferguson said the country couldn't afford to have regulation guided by "activism and media campaigns by vocal minorities", and implored politicians to "rise above sectorial self-interest and populist concerns to allow gas operations to proceed and the gas market to work for the benefit of households and businesses".

He said the Queensland experience showed what could be achieved, with LNG exports from Gladstone set to start next year, leading to annual east coast demand tripling by 2017.

The former resources minister rejected calls to reserve gas for domestic use, saying such a policy would entail a rejection of markets in energy policy in favour of the subsidy of particular businesses.

"Holding down prices for domestic manufacturers won't assist with supply," Mr Ferguson said.

"Gas reservation policies are not the cure-all for a great supply of gas into the market because they are a disincentive to investment."

International outlook

The most recent World Energy Outlook said North America was at the forefront of a "sweeping transformation in oil and gas production that will affect all regions of the world".

Massive new gas deposits have also been found off the coast of East Africa. Explorers have labelled new resources in Mozambique as being the century's largest natural gas finds.

These fields are expected to yield more than 100 trillion cubic feet of gas resources. One trillion cubic feet is enough to power a city of one million people for 20 years.

Tanzania's natural gas industry also looks set to take off. Companies are planning LNG projects after discovering about seven trillion cubic feet of gas.

The support of the Tanzanian and Mozambique governments and low ground costs could see the first LNG exports from the region as soon as 2018.

Topics:  curtis island gas lng martin ferguson resources

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