4 March 2016
The Gas Market Report 2015, released today by the Chief Economist of the Department of Industry, Innovation and Science, highlights that the long term outlook is positive for Australia’s gas exports, with Australia to benefit from the growing demand of emerging economies in the Asian region.
Despite current challenges, including downward pressure on commodity prices, the fundamentals remain strong for the gas sector, as the International Energy Agency forecasts global gas demand to increase by around 50 per cent to 2040. In China, total gas consumption is expected to more than double by 2030. Further, India’s liquefied natural gas (LNG) demand is expected to nearly double by 2019-20, while it seeks to provide reliable electricity to more than 300 million people for the first time.
More broadly, non-OECD countries use around one quarter of the electricity demand of OECD countries on a per capita basis. As these countries develop, living standards and electricity consumption will rise, driving increased demand. Our reputation as a stable and reliable supplier of LNG and our proximity to key markets provide us with a competitive advantage to meet this demand, which is expected to result in Australia providing 40 per cent of both Japan and China’s LNG and 25 per cent of South Korea’s by 2019-2020.
With this increasing demand, LNG will provide the strongest growth in resource export earnings, increasing to $45 billion by 2019-20 when Australia is expected to become the world’s largest LNG exporter. This is two and a half times the $18 billion of LNG export earnings last financial year.
However, the report does note that the current challenges facing Australian producers has put strain on our domestic market and that our eastern market does require more supply. The Government is focused on this issue and is working on a range of reform measures to improve the way the market works and to boost competition, including leading the development of a national gas supply strategy through the COAG Energy Council.
The Government remains focused on implementing initiatives to help Australia capitalise on growing demand for our commodities both at home and abroad, including removing $4.5 billion of red tape from the economy. A continued focus on innovation, exploration and new production capacity in our gas market will help to overcome short term challenges and enhance our opportunities for the future.