Australia aiming to be the 2nd largest global LNG supplier by 2015

Australia LNG Projects

Australia is aiming to be the second largest LNG supplier in the world by 2015, and with a series of projects planned to come online within the next decade, the country has the potential to overtake Qatar by 2020, sources at an industry event in Darwin this week said.

“So far in 2011, final investment decisions were reached for four Australian LNG projects,” Tania Constable, head of the resources division of the Department of Resources, Energy & Tourism said, adding that of these, BG-led Gladstone LNG and Australian Pacific LNG will begin production in 2015, while Chevron’s Wheatstone LNG and Shell’s Prelude, will come online a year later.  

Next in line, Japan’s Inpex is also expected to make an FID for the $20 billion plus Ichthys LNG project in the fourth quarter.  The company is currently in the final stages of completing the offshore front-end engineering and design work on the 8.4 million mt/year Ichthys LNG project, Sean Kildare, Darwin general manager, Inpex, said.


“Total committed capital expenditure in the LNG sector including Pluto and Gorgon [LNG projects] is over $140 billion…Australia is moving from a regional hub to a global leader in LNG,” Resources, Energy & Tourism Minister Martin Ferguson said. Within the LNG sector, the floating LNG technology “offers the promise of reduced project costs and environmental footprint by avoiding long pipelines,” David Byers, chief executive officer of the Australian Petroleum Production & Exploration Association said.

“We are expecting seven to 10 FLNG projects either operating or at an advanced stage of development within the next decade in this region,” Constable said. The FLNG market’s potential was boosted by Shell giving the final go-ahead for its 3.6 million mt/year Prelude FLNG facility in the Browse Basin off the northwest coast of Western Australia in May. PTTEP Australsia is six months into pre-FEED work on its 2 million mt/year FLNG project in the Timor Sea off northwestern Australia, which started in the first quarter, according to Exploration and Development Manager Ian Paton.

He added that the company will begin FEED proper “some time in 2012,” rather than in the current quarter as previously planned. First gas production from the FLNG project is expected in 2017, he said, later than an earlier forecast of late 2016. Bonaparte LNG is awaiting the results of its appraisal program and “authorization from the government for the FLNG project after submitting referral documents for environmental approval last week,” Jean-Francois Letellier, general manager of GDF Suez Bonaparte, said.

Drilling began at the Petrel-7 appraisal well in NT/RL-1 in the Bonaparte Basin, in the Timor Sea on August 2, and the appraisal drilling and testing operation is expected to take up to 85 days. France-based GDF Suez is the operator of the 2 million mt/year Bonaparte FLNG in the Timor Sea, with Australia’s Santos holding the remaining 40% stake. Industry sources also voiced concerns about skills shortages and a tight labor supply in Australia because of the numerous oil and gas projects being proposed.

“Australia is on track to be the largest LNG exporter, but it faces extraordinary challenges due to the tight labor supply and environmental restrictions,” Anne-Sophie Corbeau, senior gas expert from the International Energy Agency said. “The LNG operations workforce needs to increase by sixfold within the next three to five years,” Keith Spence, chairman of the Western Australia State Training Board, said Friday, adding that 2012-13 could see the labor market tighten significantly.

The country already hosts the Woodside Petroleum-operated North West Shelf project, with capacity of 16.3 million mt/year, and a ConocoPhillips-operated facility at Wickham Point in Darwin, with capacity of 3.6 million mt/year. The two current LNG projects have around 500 operations staff, according to Spence. “The government is absolutely focused on supporting the training and skilling of the workforce with $3 billion allocated to this objective in this year’s budget,” Ferguson said.

He added: “the country’s natural resource workforce strategy group will also introduce more apprentice programs for graduates and those already in the working community, and improve the retention of qualified engineers and scientists. The government recognizes that in the short term, companies need ready access to labor to get projects off the ground.”

Industry sources also emphasized the importance of maintaining good relationship with the traditional landowners and local communities in the process of initiating and delivering the LNG projects.


5 thoughts on “Australia aiming to be the 2nd largest global LNG supplier by 2015

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