APPEA Chairman: Australia Must Respond to LNG Challenge

The Australian oil and gas industry must urgently respond to the challenge of remaining competitive in the expanding global liquefied natural gas (LNG) environment, said David Knox, Australian Petroleum Production and Exploration Association (APPEA) chairman.

The Australian industry has been confronted by challenges in the past and would continue to do so attracting the next wave of investment into LNG, Knox said at the 2013 APPEA Conference & Exhibition in Brisbane.

"Our industry must take a concerted and collaborative approach to improving our efficiency and delivering gains in productivity," Knox said.

"We must also prioritize efforts to collaborate, to share infrastructure, and to deliver economies of scale."

The oil and gas industry is currently building almost $192.7 billion (AUD $200 billion) worth of projects in Australia, while a further $96.4 billion (AUD $100 billion) of projects are in discussion, according to the APPEA.

However, Knox explained that new and competitive LNG projects globally were either on the drawing board or in construction in countries such as Canada, Mozambique and the United States.

Negatively affecting the Australian industry, Knox said the cost of building new LNG projects in Australia had increased significantly over the past decade to be around 20-30 percent higher than global competition.

"Improving our competitiveness will not be feasible if left entirely to the industry," Knox said.

"Certainly it will require leadership and innovation from the industry – but it will also require measures from our suppliers, from government, and an approach to this industry as a long-term one."

Knox's comments come after several projects have either been suspended or scrapped in Australia this year due to economic factors, including the $40 billion Browse LNG joint venture project in Western Australia.


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