BRISBANE, Australia, May 28 (UPI) -- Although Australia has been slated to overtake Qatar as the worlds' biggest liquefied natural gas exporter by 2030, the escalating cost of doing business in the country could cost its economy more than $100 billion of new investment in LNG projects.
That was a predominant theme of the opening Monday of the Australian Petroleum Production and Exploration Association's conference in Brisbane, attended by some 3,000 delegates.
''Australia's attractiveness as a place to invest is under enormous pressure and unless we can work with the next Australian Parliament to rectify this, our next $100 billion worth of LNG projects may be built elsewhere," APPEA Chief Executive Officer David Byerswas quoted as saying in a report in The Age.
''It's not that long ago that the U.S. was seen as a potential customer for Australian LNG, yet this notion has quickly evaporated amid a shale revolution that continues to lift the U.S. economy,'' Byers said.
Related
International Energy Agency chief economist Fatih Birol, speaking to The Australian ahead of his speech, said Australia's approval of $200 billion in LNG investment in the past decade is impressive but the country "has its own pressures, in terms of investment, like the increasing costs."
Labor costs alone on Australian resource projects, for example, have increased 30-50 percent above those in the United States and productivity is lower, industry executives say.
Those factors have contributed to major cost overruns for projects, such as a $9 billion blowout at Chevron's $52 billion LNG project on Western Australia's Barrow Island.
Of the 12 global LNG projects under construction, seven are in Australia, APPEA says.
Shell is involved in four of those Australian projects. It is a 25 percent partner in the $52 billion Gorgon LNG project on Barrow Island and is building the $12 billion Prelude floating LNG project off the coast of Western Australia.
But because of high costs, the two other projects -- the $50 billion-plus Browse LNG project off Western Australia and the $20 billion Arrow coal seam gas export plant in Queensland -- are on the backburner.
Departing Shell CEO Peter Voser, speaking at the opening session Monday, said it was crucial for Australia to put in place "the right regulatory and tax policies to drive innovation and investment," The Australian reports.
Incoming Shell Australia country Chairman Andrew Smith, set to replace Ann Pickard who takes a new post in Alaska, said Australia "needs to urgently improve its productivity and come back to a more sustainable footing. This is about comparing one developed nation with others as investment destinations."
