​Australian LNG moving from construction into production boom

The Australian LNG industry is moving into a new phase, as it shifts from an era of construction into one of production.’

The $250 billion ramp-up phase comes at a time of increased uncertainty for the industry, with continued volatility seen in the market thanks to an unstable oil and gas price.

However, in spite of this current volatility, it is epected that 13 new LNG trains with seven new plants will come online between now and 2018.

So the question is arising in the market – will oil and gas suffer from the same sharp contraction the mining industry recently underwent during its own transition from construction to production?

According to recent Accenture Australia paper, the industry will increase even further, with Australian LNG production rising 260 per cent between 2014 and 2018, to eventually pip Qatar at the world’s largest producer.

This includes the Gorgon LNG project, APLNG, Gladstone LNG, Wheatstone, Ichthys, and importantly Shell’s Prelude project, the world’s first floating LNG (FLNG) facility.

“While the investment to date has been massive, this will overshadowed by the estimated $450 billion of ongoing investment required to sustain the industry for the next 25 years,” Accenture stated.

Yet the issue of whether Australia has the internal capacity to support this rapid growth in the market has also been brought to the fore.

“[These] market changes will force service providers to respond or disappear,” Accenture said.

“The biggest winners or losers in this new regime may well be the oil and gas sector service providers who have flourished in the capital project phase – but need to reskill and reposition for the future.”

Roy Krzywosinski, Chevron Australia managing director added: “With Australia poised to be one of the world’s largest LNG producers in the next few years, our challenge as an industry is to also be the best and most reliable. It is in the national interest to shape sustainable policy settings which both enables operational success and also helps attract future investment capable of securing economic growth, jobs and energy security.”  

Revenues from construction services are expected to decline by 50 per cent between 2014 and 2020, falling from $18 billion to approximately $9.2 billion, while operations services are forecast to grow to $13.9 billion in the same period, with drilling services expected to shift from the west to east coast, and from offshore to onshore projects. 

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