Australia is one of the world’s rich, developed countries. The economy of Australia is one of the largest capitalist economies in the world with a GDP of US$ 1.57 trillion. It was ranked the 19th largest importer and exporter, and this essay is about the export of liquefied natural gas (LNG) which is formed from coal seam gas (CNG) and its effects on the shipping industry and international companies.
Liquefied natural gas is natural gas that has been super chilled to -161®c. At this temperature, gas converts to liquid form and becomes easier to transport in tankers and is easier to store, LNG reduces greenhouse emissions and is also less than half the weight of water, so it will float if spilled on water. Australia is currently the world’s fifth largest LNG exporters and the Australian petroleum industry is aiming to make it the world’s first or second largest LNG exporter by producing at least 60 million tonnes per annum by 2020 (Australian Petroleum Production & Exploration Association, 2012).
The main two articles are about the opportunity closing on Australian LNG and about the effect it has on the shipping industry. According to the article “Australian LNG delays bad news for ship owners” the gas tanker owners face falling profits over the next few years as delays to Australian gas projects leave new ship unemployed. This article shows that the main drag on spot LNG day rates is the number of vessels coming to market, that are not committed to long term projects and which will instead depend on spot demand. The day rates would drop around $100,000 per day in 2015. The total cost of a new build LNG tanker market amounts to around $A10\6.2 billion, based on an average cost of a tanker. Due to this in 2013 there are still a number of LNG vessels that have no employment, which means that 10 out of 25 vessels excepted next year have not been fixed. However the world’s largest gas exports is Qatar which has already sealed deals with Latin America, Asia European and North Africa for a long term supply meanwhile Australia, Africa and North American are being t take exports to the international stage.
The main countries that Australia exports LNG are China, Japan, South Korea and India. However the leading Macquarie analyst has labelled Australian liquid natural gas project as increasingly uncompetitive, and adding that the window of opportunity for new developments may have already passed (The Australian, 2012). According to Wood the Australian capital expenditure on LNG projects may reach a peak in 2013 and said that the Ichthy developments could be the last new project to move into new construction which is expected to increase the foreign direct investments (FDI). Wood also added that the five advanced LNG projects were on average a third over budget and six months behind schedule, with a 40 per cent construction on the way which means that the internal rates of return forecast of those five projects have fallen from 14.9 per cent to 11.7 per cent and thus the costs are growing higher, which makes the customers price sensitive. Due to this either the local cost will rise or the buys have to endure the higher prices.
Australian Pacific LNG projects the largest financial facility ever signed in Australia which amount to US$ 8.5 billion, the facility was signed by the Export – Import Bank of the united states ( US EXIM), the Export- Import Bank of China (China EXIM) and a number of Australian and international commercial banks. The shareholders of Australia pacific LNG are Origin, Conoco Phillips and Sinopec; because of this investment it benefits Australia in a national regional and state level. Due to this the gross domestic and state product economy has increased contributing to the national and state employment during the construction stage of the project through the creation of 6000 jobs and 1000 jobs expected, it also contributed to the local economy via local government rates and taxes, local procurement and