The important role of productivity in Australia’s long-run competitive position in LNG
Brad McBean A and Matt Guthridge APwC.
The APPEA Journal 53(2) 451-451 https://doi.org/10.1071/AJ12062
Published: 2013
Abstract
With significant number of LNG projects on stream (or in various stages along the pre-feasibility to project completion continuum), world LNG markets will experience pricing pressure. This will push more customers into the spot market, doing only longer-term offtake deals where pricing is favourable to the buyer.
While Australia is positioned favourably to import markets in Asia, it will be at a competitive disadvantage given lower labour productivity (impacting both construction and maintenance activities), industrial conditions (impacting the option value of being able to ramp production up and down), higher asset costs, and a higher dollar.
Long-run returns on existing and planned LNG projects will need to focus on continuously improving productivity, particularly upstream in exploration/delineation and development, faster than overseas competitors. This will require Australian companies to take a lead role in incubating and developing drilling, completion, and workover technologies. Australia lags behind other countries, but it can catch up and overtake them if it acts now.
This extended abstract discusses Australia’s likely/potential long-run position in LNG to global sink markets; the operating constraints on LNG operations relative to overseas competitors; and, the implications for productivity improvement in LNG given potential medium-term improvements in extraction, processing, and shipping costs for LNG operations more broadly (considering relationships between commodity pricing and exchange rate).
The options for Australian LNG operations in closing any productivity gap are also discussed.
Brad has more than 20 years of business experience, with in excess of 13 years in management consulting. He has worked on or managed strategy and operational improvement engagements for many multinational clients in Australia and overseas. Prior to consulting, he spent more than eight years working in the oil industry, in corporate and consulting roles, working in upstream and downstream environments in Canada, the Middle East, Africa, and the United States. He works within PwC’s energy, utilities, and mining group and leads the firm’s productivity market priority. He holds an MBA from the Australian Graduate School of Management (AGSM) (with final year completed at the Anderson School of Business at UCLA) and a BASc (engineering) in applied geophysics from the University of British Columbia. |
Matt is a partner at PwC’s Melbourne office and the national mining, oil and gas consulting leader. He has more than 15 years of local and international experience working with mining, oil and gas clients on talent management, diversity, leadership development, and change management. He has advised some of the world’s largest resources companies and governments to help them make significant and sustainable improvements to their performance and people practices. As a qualified psychologist, executive coach, mediator, and facilitator, he frequently works closely with senior executives to improve their personal and team effectiveness. |
