By 2020, Australia will be on course to becoming one of the world’s two largest gas producers. But playing host to a rich resource base won’t guarantee success in the global energy marketplace.
Australia’s liquefied natural gas (LNG) potential is huge, with LNG exports forecast to surge over 500 percent to A$60.95 billion by 2018-2019. The industry is gearing up in anticipation, investing around A$200 billion over five years, with more multi-billion investments under consideration.
Recent analysis reveals Australia’s status as a producer is not reflected in other key areas of top-performing energy sectors globally. According to the “2014 Global Energy Architecture Performance Index” (published by the World Economic Forum and Accenture), the country ranks 26th out of 140 countries in delivering an effective, balanced energy system. While Australia ranked high for economic growth and development, and energy access and security, it still has much ground to cover in terms of environmental sustainability.
Harnessing the benefits of the looming LNG boom means Australia must transform into a major global operator without delay. A lack of action could not only mean losing out to international competitors and compromising new LNG developments, but it could also impact the country’s broader economic future, including vital tax revenues and job creation opportunities.
The importance of getting LNG right is well understood by the wider business community. Accenture teamed with the Australian Financial Review on a survey and subsequent report exploring energy issues for Australia, particularly the forecast future gas boom. The survey showed clear consensus around the most urgent issues to be addressed, including reduction of approval requirements for capital investments, long-term planning by agreeing locations for infrastructure—such as pipeline corridors—and a body outside of government that makes decisions on long-term policies.
Tackling some core barriers should bolster Australia’s attractiveness as an investment arena, as well as improve productivity. Short term, reducing hurdles to entry for investors, such as workforce availability and high costs, could bolster Australia’s attractiveness on the world energy stage. Increasing collaboration between government, industry and project owners could reduce risk, increase efficiency and boost productivity. And the creation of a national Australian energy body could enable stable, consistent and transparent policymaking—a prerequisite for investor confidence.
Longer term, there is increasing demand for a smart, interconnected energy infrastructure. The real upside could come from a more coordinated approach, particularly in greenfield development. And lastly, the boosting of government support for R&D could stimulate development of new energy technologies for LNG production.
True commitment to swift implementation is critical to meet the growing pressure for restructuring the Australian energy sector. Taking firm steps now could help ensure momentum is maintained and meet the growing pressure for concrete restructuring from all parts of the energy sector—and well beyond. Provided this takes place, unprecedented efficiency in LNG production could deliver remarkable opportunities to the nation.