BMI View : Australia is set to become a major player in the global LNG market in the coming years, overtaking Malaysia by 2016 to become the second largest exporter in the world behind Qatar. However, we see waning investment sentiment, which will hit long-term production growth, especially for oil. The country will also have to contend with a growing reliance on refined fuels imports as domestic production will not be sufficient to meet rising domestic demand.
|e/f = BMI estimate/forecast. Source: ADIS, EIA, BMI|
|Crude, NGPL & other liquids prod, 000b/d||395.5||428.9||451.6||463.4||469.0||476.7||483.6|
|Dry natural gas production, bcm||60.8||61.5||74.2||95.6||114.6||119.9||121.4|
|Dry natural gas consumption, bcm||35.7||36.5||37.5||38.2||38.8||39.2||39.8|
|Refined products production, 000b/d||609.4||577.5||519.8||426.2||421.9||421.9||421.9|
|Refined products consumption & ethanol, 000b/d||1,155.2||1,167.4||1,179.4||1,190.2||1,202.2||1,212.8||1,223.5|
The main trends and developments we highlight for Australia's oil and gas sector are:
Crude oil and liquids production will continue to trend downwards over our forecast periods as discoveries have not been able to sufficiently replace declining production from mature fields. However, Apache's offshore discovery in the Canning Basin could open up a new oil province that poses upside risk to our forecasts from 2018.
Gas production will significantly increase between 2015 and 2018 as developments backing new LNG export projects come online. Thereafter, growth will slow as prohibitively high development costs and the difficulty of carrying gas from gas-rich Western Australia and Northern Territories to eastern Australia restrict investment appetite.
These projects have been supported by investments made over 2010-2014 when oil prices were more favourable. Given our expectation for oil prices to remain soft through to 2018, we believe it could dissuade investment into new projects, which in turn will hurt Australia's long-term production growth outlook.
A decision to link gas discoveries in the Browse Basin to existing LNG projects - cost permitting - and/or a FID for a pipeline carrying gas from NT to eastern Australia, thereby providing markets for production, will pose upside risk to our forecast.
Refinery shut-downs will decrease Australia's refined oil production over our forecast period. This will reduce its crude oil import need, but increase its refined oil import requirement.
Oil and gas consumption will trend upwards alongside economic growth. However, oil consumption growth will be slower than in the previous decade, due to its flagging economy, slowdown in the mining sector as well as rising fuel efficiency and weak car sales growth in the transport sector.