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Gas to beat coal as made-in-Australia export

Liquefied natural gas will overtake coal as Australia’s second-biggest export earner by 2017, according to UBS AG, as China steps up purchases of cleaner energy to fuel its economic growth.

The CHART OF THE DAY shows the value of Australia’s LNG exports will triple to A$60 billion ($54 billion) by 2017, surpassing an estimated A$46 billion in coal receipts, according to UBS forecasts. Australia may overtake Malaysia and Qatar to potentially become the world’s biggest LNG exporter by the end of the decade, according to research from Australia’s commodity forecaster. Australia is already the No. 1 supplier of iron ore, with exports forecast at A$92 billion in 2017.

New gas projects “will come on with a roar over the next couple of years and they’ll give a big lift up in terms of volume,” said Justin Smirk, a Sydney-based senior economist with Westpac Banking Corp. “Iron ore is more of an ongoing growth story.”
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Chevron Corp., the second-largest U.S. energy producer by market value, and BG Group Plc of the U.K. are among those investing an estimated $180 billion in seven new LNG projects in Australia. Globally there are 12 major LNG developments in process, meaning the nation will provide the majority of supply growth over the next five years, according to the Bureau of Resources and Energy Economics in Canberra.

The strongest market for Australian LNG will come from China, as the world’s second-largest economy continues to expand at 7 percent to 8 percent annually and more people move from rural areas to cities, said Stephen Walters, chief economist at J.P. Morgan Australia Ltd. in Sydney. Japan is currently the world’s biggest gas importer, accounting for 78 percent of Australia’s LNG exports in fiscal 2013.

“As we look to 2030, we anticipate over 70 percent of the world’s energy will still be supplied by oil, gas and coal,” Andrew Mackenzie, chief executive officer of BHP Billiton Ltd., the world’s biggest mining company, said in a speech March 4. “Gas is expected to see the strongest growth through wider use in power and transportation.”

Source: Bloomberg