1. NS4960 Spring Term 2017 Australia: Energy Policy
Oxford Analytica China Coal Trends Signal Deep Economic Shifts, April 2016

2. Overview Australia is a major energy suppler to Asia
Major energy security concerns revolve around ensuring its energy export industry securing new markets in Asia
Compared to much more interventionist Asian governments Australia relies on flexible and transparent energy market and private investment to ensure its energy security
Australia
exports two-thirds of its total energy output and
is the world’s second largest coal exporter and
the fifth largest exporter of LNG
Country is also a major uranium exporter

3. Energy Balances I Coal production has doubled since 1990
Japan is typically the largest export market – takes around % of Australia’s exports
China, South Korea, and India are also important markets.
Now Australia has to compete with rapidly rising coal exports from Indonesia
Oil security presents a different picture
Australian crude oil production peaked in 2000 and 800,000 bpd and has declined gradually since
Demand has gradually risen
Presently, Australia imports nearly half of its crude oil needs.

4. Energy Balances II
Government maintains that oil security can rely on flexible global markets
Critics have focused on
rapidly declining domestic refining capacity and
near total dependence on imported oil products in future
Critics argue Australia needs to retain enough refining capacity to ensure product supplies in an emergency
However government contends that a
diversified products supply market and
healthy regional refining system centered in Singapore can meet Australia’s oil product security needs.

5. LNG Boom I
Australia has emerged as a major LNG producer with plans for major expansion
Exports destined mainly for Japan, but also South Korea and China
Country poised to surpass Qatar as the largest LNG exporter in the world
Seven major LNG projects under construction with combined investments of $168 billion
Seventy percent of the LNG projects under construction in the world in 2012 are in Australia

6. LNG Boom II Several Problems
The Australia resource boom has been driving up the costs of
Engineering services
Labor
Equipment and port services
Chronic delays due to overloaded infrastructure and port congestion also taking a toll
Resource boom has also driven up value of the Australian dollar
Application has caused equipment and capital costs for projects to escalate dramatically

7. LNG Boom III
Also Australian LNG will face strong competition for Asian markets from
Potentially lower cost LNG projects in the U.S. and Canada from the shale boom
Renewed export competition from Qatar
New Russian supplies from Sakhalin
West African supplies drawn by Asia’s LNG price premium
Papua New Guinea LNG
Potential East African offshore gas and
Even possibly Alaskan LNG

8. LNG Boom IV Other Problems
In China, Australian LNG will also have to compete with potentially much higher domestic conventional and shale gas production
Other competition in China from as pipeline gas from Central Asia , Myanmar and possibly Russia’s East Siberia
Japan’s LNG needs uncertain due to nuclear question
Growing competition suggests LNG price trends over longer run are quite uncertain