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New Market Study Published: Australia Oil & Gas Report Q1 2014


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2013-12-23 18:11:00 - Fast Market Research recommends "Australia Oil & Gas Report Q1 2014" from Business Monitor International, now available

Australia is on track to becoming the world's largest liquefied natural gas (LNG) exporter by the end of our forecast period in 2022, surpassing Qatar as a series of major projects come online. However, the spiralling costs of LNG projects will most likely slow the momentum in further expansion of Australia's LNG export capacity. Gas production and consumption growth could be further threatened by increasing rules on the extraction of coal bed methane. The country will also have to contend with a growing reliance on oil imports as domestic crude oil production declines while refining outlook appears increasingly bleak in face of regional competition.

The main trends and developments we highlight for Australia's oil and gas sector are:

Full Report Details at

- www.fastmr.com/prod/754462_australia_oil_gas_report_q1_2014.aspx

* Our forecast for gas production is 123.8bcm by 2017, up from 48.2bcm in 2012. This growth will be brought about by the development of gas fields that will come online alongside the completion of LNG projects. We expect about 75% of this gas to be exported as LNG, largely to Asian customers. By 2022, gas production is forecast to hit 148.4bcm, with LNG exports surpassing 100bcm.
* However, further expansion of liquefaction capacity - and consequently exports - could be held back. Spiralling developments costs, owing to a shortage of skilled labour and a strong Australian dollar, together with an expected loosening of the global LNG market as more supplies come online, could worsen the economics of LNG projects in Australia.
* New oil is not likely to flow fast enough to make up for declining production in the country's ageing fields. Total liquids output (excluding refinery gains) fell slightly to 484,200b/d in 2012, according to the US EIA. However, the start-up of gas projects from LNG developments from 2014 should slow the rate of decline, as a result of associated liquids and condensate output. We expect total liquids output to fall to 477,200b/d by 2017 and 476,900b/d by 2022. Further oil discoveries and possible development, particularly in the Cooper Basin, and production from liquids-rich shale pending further exploration could pose upside risks to our oil production forecasts.
* The refining environment remains weak in Australia. Shell's 79,000b/d Clyde refinery in Sydney will close in September 2012, while Caltex announced that it will shut down the Kurnell refinery - Australia's second largest with a capacity of 124,500b/d and also located in Sydney - in the second half of 2014. Shell also announced that it is selling its Geelong refinery in April 2013. The age, small size and relatively low complexity of the country's refineries has rendered them uncompetitive against regional counterparts.
* With the closure of Clyde in September 2012, we estimate that Australia's refining capacity fell from 757,000b/d to 737,500b/d in 2012. The closure of Kurnell in the second half of 2014 will push this further down to 543,200b/d by 2015. Given a poor refining climate and an increasingly competitive fuels market in Asia-Pacific, we see little prospect for new refineries. This could ease Australia's crude oil import requirement. With less feedstock needs as refineries close and a slowdown in the rate of decline in liquids output, net crude oil imports could fall from 152,600b/d in 2012 to 34,700b/d by 2017.
* However the effect of this would be cancelled out by the country's growing oil product import needs as domestic refined oil output falls. Consumption is expected to continue its uptrend from 1.13mn b/d in 2012 to hit 1.18mn b/d in 2017. Refined product output is still expected to fall from 636,900b/d in 2012 to 511,900b/d in 2017. As a result, its net import of oil products is expected to rise from 489,200b/d in 2012 to 665,800b/d in 2017.
* Australia's carbon trading scheme - the world's second largest after the European Union - came into effect on July 1 2012. Under this scheme, businesses will pay AUD23 (US$24.18) per tonne of carbon produced. The price will rise by around 2.5% in real terms in 2014 and 2015, but will be determined by the market, subject to a price ceiling and floor, in 2015. This is currently being challenged by newly-elected Prime Minister Tony Abbott, though he is likely to face a long fight against environmentalists to repeal this law and replace it with a Direct Action plan, which involves the government paying industries to reduce their carbon emissions.
* Tighter restrictions on coal-bed methane (CBM) operations have been imposed at the federal level and in New South Wales (NSW) and threaten the commercial viability of CBM projects and pose risks to existing but undeveloped CBM assets that firms are currently sitting on. A roll-back of appetite for CBM development could result and pose a downside risk to both our production and consumption forecasts for Australia.

At the time of writing we assumed an OPEC basket oil price for 2014 of US$101.80 per barrel (bbl), falling to US$100/bbl in 2015. Global GDP in 2014 is forecast at 3.1%, up from an assumed 2.6% in 2012. For 2015, growth is estimated at 3.3%.

About Business Monitor International

Business Monitor International (BMI) offers a comprehensive range of products and services designed to help senior executives, analysts and researchers assess and better manage operating risks, and exploit business opportunities, across 175 markets. BMI offers three main areas of expertise: Country Risk BMI's country risk and macroeconomic forecast portfolio includes weekly financial market reports, monthly regional Monitors, and in-depth quarterly Business Forecast Reports. Industry Analysis BMI covers a total of 17 industry verticals through a portfolio of services, including in-depth quarterly Country Forecast Reports. View more research from Business Monitor International at www.fastmr.com/catalog/publishers.aspx?pubid=1010

About Fast Market Research

Fast Market Research is an online aggregator and distributor of market research and business information. We represent the world's top research publishers and analysts and provide quick and easy access to the best competitive intelligence available.

For more information about these or related research reports, please visit our website at www.fastmr.com or call us at 1.800.844.8156.


Author:
Bill Thompson
e-mail
Web: www.fastmr.com
Phone: 18008448156

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