Collaboration key to LNG transition: report

Australia is expected to overtake Qatar as the world leader of LNG production.

Australia is expected to overtake Qatar as the world leader of LNG production.

By Courtney Pearson

May 20, 2015

AUSTRALIA’S LNG industry is on the brink of a major transition and needs greater collaboration to successfully move to production, according to a report commissioned by the Australian Petroleum Production and Exploration Association.

In its report, Ready or not? Creating a world-leading oil and gas industry in Australia, Accenture stated that the “speed, scale and scope of this transition is unprecedented anywhere in the world”.

“If operators, the service sector and government can work together to get the transition right, we estimate the industry could collectively realise an additional $50 to $70 billion of shareholder value over the next 25 years – and this will have a positive impact on the whole economy,” Accenture Australia managing director and Asia Pacific energy lead Bernadette Cullinane said.  “Collaboration is really the hallmark of a mature and capable industry. There should be more sharing of infrastructure, in particular around warehouses and pipelines and supply vessels.”

The report found the LNG industry’s total capital investment and operating expenses will reach about $360 billion by 2020 – 40 per cent higher than the $250 billion invested during the recent capital investment boom – and will contribute $55 billion to Australia’s GDP in 2020.

Natural gas production will rise by more than 90 per cent, the number of wells in production will increase by 400 per cent and pipeline infrastructure will increase by 45 per cent in the next five years.

Accenture surveyed operators and service companies and defined five dimensions for transition readiness: workforce capacity, workforce capability, industry competitiveness, regulatory framework and industrial relations framework.

Furthermore, adopting more digital technology within day to day operations would also help to drive Australia to become a competitive industry.

“It’s the greater industry and regulatory collaboration that we think is the key driver for increased competitiveness of the Australian industry and we believe that there are many things…[it] can do to build on what is tremendous opportunity to take it to the next level, and have a big impact on Australia and the economy at large,” Mrs Cullinane said.

More than $250 billion has been invested in the Australian LNG industry and the construction phase has peaked, with 13 new LNG trains within seven new plants to come online between 2015 and 2018. By 2018 it is expected that Australia will overtake Qatar as the largest LNG producer in the world.