Bruce covered the topic “Australia in the World Gas Market” providing an overview of world gas reserves and Australia’s position as a relatively small player both in terms of reserves and production. He noted that around the world there is an abundance of gas, but - as in Australia - known reserves are generally distant from markets. This requires either pipelines or LNG shipping to deliver gas to markets.

It is very clear that world consumption of natural gas will grow strongly over the next 20 years rising from around 90 trillion cubic feet per annum (tcf) at present to 150 tcf by 2025. Major gas consuming nations such as the USA are rapidly becoming net importers and this has opened up important opportunities for Australian sourced LNG.

Bruce outlined the emerging role of Qatar as a country with huge low cost reserves of natural gas. Australia faces challenges in competing with such countries in both gas to liquids and LNG. Overall however he assessed the opportunities for Australian based LNG as being very positive given that world trade is expected to increase from around 7 tcf per annum at present to around 12 tcf over the next decade.

He went on to discuss the Australian market including the fact that competing demand for gas by LNG is expected to move gas prices upwards in Western Australia. Similarly he expressed the view that a looming gas shortfall in eastern Australia would drive gas prices higher.

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He concluded his presentation with an assessment of Australia’s competitive advantages in the Asia Pacific gas industry. The positives for Australia include political stability, proximity to markets, size of reserves and the existence and nature of existing support infrastructure. On the other hand Australia faces a number of issues that can impact on its long-term competitiveness, including higher costs (labour costing three times that of countries in Asia), reserves quality (where Australian gas generally has a low condensate content with our major reserves located in very deep water) and finally the adverse impact of the Petroleum Resource Rent Tax regime on major gas-based resource projects in this country.