World Australia is poised to become "the Middle East of gas" as Asia's rapidly growing economies queue up to buy its vast reserves in liquid form.
Australia poised to become 'Middle East of gas'
SYDNEY // Australia is poised to become "the Middle East of gas" as Asia's rapidly growing economies queue up to buy its vast reserves in liquid form. The country's government last week approved the massive Gorgon liquefied natural gas (LNG) project off Western Australia, which the prime minister, Kevin Rudd, said would cost A$50 billion (Dh154.72bn) to build and would generate 6,000 jobs. The joint venture by Chevron, Shell and Exxon Mobil is already underpinned by supply contracts with China and India valued at more than US$60bn, and more customers are likely to sign up before it begins operating in 2014. Gorgon is just one of a clutch of LNG projects planned in the next decade that analysts say will pump tens of billions of dollars into the economy and see Australia challenge Qatar as the world's major gas exporter. Hailing Gorgon's $41bn supply contract with PetroChina this month, the largest trade deal in Australian history, the government announced that LNG was an important part of the country's future prosperity. "This unprecedented export deal confirms Australia's importance as a global energy superpower supplying vital clean energy resources and technologies to China and our other Asia-Pacific trading partners," said Martin Ferguson, the Australian resources minister. Asian demand for coal and iron ore have helped Australia's economy avoid recession during the global downturn but the State One Stockbroking analyst, Peter Kopetz, said LNG was the next boom commodity. The gas is liquefied for shipping abroad, where it is turned back into gas and distributed via pipeline. "The numbers are phenomenal. When you look at them it's mind-boggling," he said. "It's going to be LNG boom times." Australia exported 15.2 million tonnes of LNG worth $5.2bn in 2006, a figure the government estimates will quadruple to 60 million tonnes by 2015 if all currently planned projects proceed. "Potentially, there could be many more projects coming on board," Mr Kopetz said, pointing out that new discoveries were being made all the time. He said Australia had the potential to become "the Middle East of gas" in coming decades as the world's oil supplies dwindled. "Have a look at the Middle East, how they've benefited over the past 50-60 years from the oil boom," he said. Western Australia is the centre of the LNG boom with three huge gas fields off its northwest coast: the Carnarvon, Browse and Bonaparte basins. But Mr Kopetz also points out that Queensland state on the east coast has significant reserves of coal seam gas (CSG), naturally occurring methane trapped by water deep underground that can be converted to LNG. Shell plans a CSG plant in Queensland expected to produce up to 16 million tonnes of LNG a year, with other energy giants such as Britain's BG Group, ConocoPhillips, and Malaysia's Petronas also developing projects in the area. Despite the proliferation of LNG schemes, EL&C Baillieu head of research Ivor Ries said there was sufficient demand from Asia. He said existing LNG fields in Malaysia and Indonesia were coming to the end of their operational life, creating a market for Australian gas. Asian buyers were also keen to source gas from Australia rather than outside the region because it offered a secure supply, Ries said. "If you're in Asia, you don't have to route your ships through a war zone, which is the Middle East, and the distance is shorter," he said. However, not everyone is happy about Australia's rush to exploit its LNG reserves, with green groups raising concerns that environmental factors are being neglected. Peter Garrett, the environment minister, has conceded Gorgon is "greenhouse-gas intensive" and could raise national emissions by up to one percent if ambitious plans to pump carbon dioxide emissions into the seabed fail. But while Mr Garrett included 28 conditions in his Gorgon approval designed to protect the environment, Ries said the government was determined to develop LNG resources. He said the industry had the potential to overtake coal as the country's most valuable export, generating jobs, boosting the economy and filling government coffers with tens of billions of dollars in tax revenue. "The tax figures are quite exciting for government. If all these projects go ahead, Canberra and the states of Queensland and Western Australia would be awash with cash," he said. ? Agence France-Presse