With about $180 billion worth of LNG projects currently under construction or committed to, Australia is likely to overtake Qatar as the leading LNG exporter by 2017.
While the Browse project, despite serious environmental concerns, has the blessings of the Western Australian government, and is seen as potentially one of the last greenfield LNG developments, there is increasing concern that the project might become victim to the success of other LNG projects that have driven up costs.
While supply side dynamics are changing, Tri-Zen principal consultant Tony Regan told EnergyNewsPremium that Browse was third on the priority list for Woodside, which is more focused on Pluto expansion followed by progress on Sunrise, and escalating Australian LNG project costs would only delay it further.
"There might be a case with them saying that why don't we delay it a bit - let things cool a bit and come back with a project in the 2018-2020 slot when the EPC costs have dropped a bit," Regan said.
The other greenfield project, Shell/PetroChina's Arrow venture in Queensland, is more likely to be developed primarily because of PetroChina being committed as an offtaker.
Already, Woodside has delayed the final investment decision on Browse from the middle of 2012 to mid-2013 and is also in the process of flogging off part of its stake in the project.
And with timelines slipping, industry analysts say Browse might miss that critical window of opportunity, despite a robust demand side.
Merrill Lynch analyst David Heard told EnergyNewsPremium recently: "The demand side is relatively predictable and will continue to make room for projects, but it is the supply side competition that is more of a concern.
"There is talk of more LNG projects based out of East Africa, and it is the hottest area of gas exploration."
An indicator of that is the heating up of the takeover of UK-listed Cove Energy, which saw a rival bid being lobbed by Thailand's PTTEP against an original offer from Shell.
Of interest to potential acquirers is Cove's interest in Rovuma Area 1 in Mozambique, which analysts say has enough reserves to justify an LNG project to supply gas to Asia.
Regan said: "Mozambique, in particular looks most promising. There is some Indian investment in LNG and East Africa is also very promising. We are going to see one, if not two, projects there."
He added that with Angolan LNG coming online later this year and potentially Nigeria, there would be more pressure on the supply side.
"That was all set to go to the US, and now they are not going to need it," Regan said.
"I think they would have to unwind some agreements but it would be a surprise to see Angola get some term commitments into Asia. And then there is Nigeria, and they will all sell into Asia."
What has potentially become a game-changer in the global LNG market, and arguably a threat to Australian LNG exports, is the shale boom in North America and potential exports from there.
"We are getting a lot more LNG in the pipeline," Regan said.
"Say 18 months ago, Australia and PNG were the only show in town, but that has changed dramatically in the last few months, in particular from Canada and Russia. Kitimat looks like it could take an FID and Shell and others are looking at a second project."
Analysts say that the supplies from North America are of particular concern, where the shale gas boom has depressed natural gas prices and many companies that had previously developed LNG import terminals are now vying for export licenses.
Of interest, analysts say are the terms of offtake agreements for US LNG supply. They point to the recent supply agreement between Korea's Kogas and Cheniere Energy, where the LNG being sold to Kogas is being priced at Henry Hub prices - which is at record lows - rather than indexed to Japanese crude import prices.
And even though Asian demand is unlikely to dwindle away, escalating costs and competing low cost supply could pressure Australian LNG exports.
Heard said: "The market is there but if Browse can be competitive to win that market is the difficult question."
