Imports of liquefied natural gas (LNG) to Australia - the world's biggest LNG exporter - now appear "highly realistic" as the country struggles to fill a looming gas shortage, U.S. energy giant Exxon Mobil Corp said on May 30.
The assessment will add to the sense of urgency in the industry, which experts say needs at least A$10 billion ($6.9 billion) in new developments to meet longer term gas demand and bring down high prices that are crippling many manufacturers.
As recently as a year ago, many thought importing LNG to Australia would be irrational, but shortages are expected as soon as 2022 and there are now five import proposals on the table, including one from ExxonMobil.
"Just given the nature of growth in demand and where the outlook for supply is, at least for a period LNG import terminals look highly realistic," Exxon Mobil's new chairman for Australia, Nathan Fay, told an industry conference.
Exxon Mobil and its partner BHP Group are the dominant suppliers into the southeastern gas market, and imports would be complementary to further development of offshore fields in the Gippsland Basin, Fay said.
The start-up of three LNG export plants in northeastern Australia has sapped gas from the local market and also led to higher prices, as most of the new supply is from higher cost coal seam gas wells.
At the same time, drilling bans in the southeastern states of Victoria and New South Wales have curbed new supply to fill a gap as the offshore fields that meet about 40% of the southern states' needs are drying up.
If supply doesn't improve and prices fail to come down, manufacturers dependent on gas will shut, Australian competition regulator warned on May 30 in its latest report on the east coast gas market.
However, analysts said imported LNG was unlikely to be this cheap given the distance it has to travel, with new local supplies needed to bring certainty of supply and potentially cheaper prices.
Source:sxcoal
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