The death of Australian LNG—and how to bring it back to life
Saul KavonicWood Mackenzie.
The APPEA Journal 56(2) 574-574 https://doi.org/10.1071/AJ15080
Published: 2016
Abstract
This extended abstract provides an overview of the recent LNG capex boom, Australia's place in the global LNG supply industry, and how this capital expenditure is forecast to rapidly decline in the next few years.
The author analyses how the prospect for new LNG projects in Australia is bleak, with recent Australian projects remaining near the top of the breakeven cost curve compared to other competing projects globally. This incorporates an analysis of the impact of cost deflation to date, which has not been a structural shift in costs and is therefore insufficient to enhance Australia's relative competitive position.
An analysis illustrating the hidden value of Australia's existing LNG infrastructure is then presented, including how debottlenecking, brownfield economics, and collaboration and infrastructure sharing could improve Australia's competitive position and what the size of the prize would be in doing so.
The author then looks at what it will take from operators to realise this potential, and suggests how the industry shock resulting from the oil price drop could provide the impetus for the more collaborative and humble approach that will be needed.
Saul Kavonic works at Wood Mackenzie, where he is a core member of Wood Mackenzie's global gas and LNG knowledge network, and leads coverage of the global LNG EPC sector and Australasia mergers and acquisitions, inter alia. He has delivered strategic consulting projects for major listed Australian and international companies across the upstream, downstream, infrastructure, and logistics sectors. Prior to Wood Mackenzie, Saul worked at Woodside Energy, spanning corporate strategy, business development, and commercial roles; including working on Woodside's global LNG, unconventional gas, and LNG market opportunities. He has worked at Australia's largest Venture Capital fund, M.H. Carnegie & Co, and also in corporate advisory roles in Africa. Saul has been an advisor on resources and economic development policy for African governments and institutions, including the United Nations Economic Commission for Africa and African Union Commission. He holds degrees in Law (Honours) and Chemical Engineering (Honours) from the University of Melbourne. |
