Oil and gas
BMI has commented that Australia is et to become a major player in the LNG market by the end of the decade. However, BMI sees waning investment sentiment, which will slow growth momentum. The country will also have to contend with a growing reliance on oil imports as domestic crude oil production experiences weak growth while refining outlook is bleak in face of regional competition.
BMI believes that crude oil and liquids production will continue to trend downwards over the period to 2023 as discoveries have not been able to sufficiently replace declining production from mature fields.
Gas production is set to significantly increase between 2015 and 2018 as developments backing new LNG export projects come online. Thereafter, BMI has said that 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. A decision to link gas discoveries in the Browse Basin to existing LNG projects and/or a FID for a pipeline carrying gas from NT to eastern Australia, thereby providing markets for production, BMI has said till pose an upside risks for forecasts.
When it comes to refining, shutdowns will decrease the country’s refining oil production to 2023 and this will also reduce its crude oil import need, but increase its refined oil import requirement.
For oil and gas consumption, BMI has said that this will trend upwards alongside economic growth. However, oil consumption growth will be slower than in the previous 10 years, due to a slowdown in economic growth, limited growth in vehicle sales and fuel efficiency measures. Gas consumption growth will be higher than oil, but also faces headwinds from expensive gas supplies.
BMI has said that while Australia’s hydrocarbons resource base is strong, the company does not envisage it will lead to investment in new petrochemicals capacity over the medium term due to infrastructural and cost barriers. The country’s refining outlook, BMI has said, is poor due to declining oil production in fields that had supplied the country’s refining sector located in the east. The relatively unsophisticated refining sector is increasingly uncompetitive and by 2016 refining capacity will be half the peak seen in 2003. On the upside, it appears that most of the refineries remaining in Australia intend to stay in operation. Reduced refinery output will limit the naphtha available for local petrochemicals production, although naphtha is not the main source of feedstock in the country.
Gas availability is set to increase dramatically, according to BMI, however much will be exported. Opportunities for using ethane in petrochemicals are limited due to the remoteness of gas fields from petrochemicals facilities, which would lead to significant costs with transporting ethane cancelling out any competitive advantage.
Edited from report briefs by Claira Lloyd