Rystad believes Australia will hold onto its dominance of the global LNG market once it overtakes Qatar in 2020 despite North America's swath of yet-to-be-committed projects and a forecast 65% drop in LNG investments in Australia.
Rystad, which formed in 2004 in Norway and now competes with the likes of Wood Mackenzie for energy market intelligence analysis, launched its first E&P database UCube in 2010 and an oil field service database the following year, expanding to London in 2011 followed by New York and Houston in 2012 and Moscow in 2013.
Rystad analyst Leslie Wei told Energy News that while North America would be the largest contributor to the global LNG scene in terms of new projects with additional volumes of 80 million tonnes per annum in 2025, Australia has a potential 50MMtpa from as-yet sanctioned projects and 70MMtpa from producing/sanctioned projects.
Based on this, the total expected Australian production is higher than the total North American expected production in 2025.
As the chart (pictured) reveals, Rystad agrees with industry consensus that says Australia will overtake Qatar in 2020 and remain the largest LNG producer going forward. North America is not included in the chart since the development and timing of the projects are uncertain.
"In terms of economics Australian LNG is more competitive than North American exports; this is evident by the break-even prices and also logical due to the export distances," Wei said.
Unsanctioned projects naturally have higher breakeven prices since estimated costs are speculative and not yet incurred. Breakeven prices, she said, are strongly related to the current development phase of a project.
Wei said unsanctioned projects in Asia had an average breakeven price of about $US12/thousand feet, while unsanctioned projects in Russia have an average breakeven price of about $11/thousand ft.
Among the unsanctioned projects, Australia is the second best in class after East Africa, Rystad believes.
"With breakeven down to $9/thousand feet, these fields should be commercial as long as the East Asia gas LNG price remains high," Wei said.
"The largest competitor to new Australian projects is potential North American LNG exports. However, the shorter distance to the consumer market puts Australian LNG at an advantage."
As for the likelihood that North America will fulfil its potential to be the biggest contributor to LNG production by 2025, Wei said this depends on the sanctioning of LNG projects.
"Cheap gas from shale will be an advantage for North American LNG exports; however, the long distance to East Asia provides a slight disadvantage compared to Australia," Wei said.
Australia has been investing heavily in new LNG plants since 2010, but the investment cycle is coming to an end and Rystad forecasts that over the next three years, investments in the sector will drop about 65% while production increases 130%.
Wei believes that the Australian unsanctioned projects are still competitive according to the global supply curve, despite several unsanctioned projects being delayed or dropped last year.
"Pending the approval of unsanctioned projects, Australia will experience a new investment cycle as soon as 2018," Wei said.
