Australia is unlikely to challenge Qatar as the biggest liquefied natural gas exporter “any time soon” and has too many proposed projects competing for customers, Macquarie Group Ltd. said.
Only a “fraction” of the projects planned in Australia may proceed, analysts Adrian Wood, Gavin Maher and Kirit Hira wrote in a report on Monday. While LNG demand may double to 372 million tons a year by 2020 from current levels, supply is “more than up to the challenge,” their report shows.
“Beyond 2014, it continues to look like a buyer’s market, given the growing number of proposed projects competing for finite demand, suggesting many trains simply will not be needed,” the Sydney-based analysts said.
The A$43 billion ($39 billion) Gorgon project led by Chevron Corp. and the A$13 billion Pluto venture operated by Woodside Petroleum Ltd. are under construction in Western Australia and among more than a dozen proposed developments targeting increasing Asian demand for cleaner-burning fuel. BG Group Plc, Santos Ltd., ConocoPhillips, Origin Energy Ltd. and Inpex Corp. also are advancing LNG plans.
Oil Search Ltd., partner in the $15 billion LNG project in Papua New Guinea led by Exxon Mobil Corp., is “best suited” to the conditions, the analysts said. The Papua New Guinea project has “superior economics,” with the cost of potential expansion lower than that of rival ventures, Macquarie said. The fact that Exxon is operator also gives the analysts confidence, they wrote.
About half the proposed LNG projects in Australia may ultimately be sanctioned, Macquarie’s Wood said in January. Half the production units planned in the Australia-Pacific region may be delayed, due partly to competition and a skills shortage, Bank of America Corp.’s Merrill Lynch said in January. (Bloomberg)
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