Australian Oil, LNG Production to Increase Next Year

Oil production is expected to jump to 29.5 billion liters, or about 508,000 barrels a day, in the year ending June 30, 2011, on projected increases from BHP’s Pyrenees project and Apache Corp.’s Van Gogh development, the Australian Bureau of Agricultural and Resource Economics said in a report today. LNG exports may rise to 18 million metric tons, buoyed by Perth- based Woodside’s Pluto venture in Western Australia, it said.

Australia’s total energy exports may increase 20 percent to A$66 billion next fiscal year as a global economic recovery drives oil prices higher, the report said. The average price for the West Texas Intermediate benchmark will gain 25 percent to $77 a barrel in 2010, the Canberra-based bureau forecasts.

“Energy demand is closely linked with economic growth, and in 2010-2011 we are expecting things to rebound,” Alan Copeland, an analyst at ABARE, said by phone today. “When you talk about exports, the numbers paint a fairly positive story.”

Oil production is set to gain 4 percent in 2011-2012, then gradually fall to 25 billion liters three years later, it said. LNG exports may rise at an average annual rate of 9 percent over the following four years and could “increase significantly” after 2014-2015 with first production at Chevron Corp.’s A$43 billion Gorgon venture, ABARE said. Coal-seam gas-to-LNG projects in Queensland state also could add to Australian exports, according to the bureau.

LNG Projects

Woodside, Chevron, Santos Ltd. and Royal Dutch Shell Plc. are among companies planning more than a dozen proposed LNG projects in Australia to tap rising Asian demand for cleaner- burning fuels. The value of Australian LNG exports may almost double to A$13.5 billion in the next five years, the bureau said.

The nation’s uranium oxide production may increase 17 percent to 10,510 tons next fiscal year as Quasar Resources Ltd.’s Four Mile mine in South Australia starts up and BHP Billiton’s Olympic Dam returns to full output, ABARE said. It expects uranium mine production to climb at an average annual rate of 7 percent through 2014-2015. The value of uranium exports may rise to A$1.7 billion by 2015.

Average uranium prices in 2010 may drop to about $44 a pound from $46.30 a pound in 2009 as supply exceeds demand for a second year, according to the report. Prices are projected to rise “steadily” through 2013 and to record significant gains by 2014 and 2015 amid increasing nuclear power demand, according to the report.

Project Delays

Mines in South Australia and Western Australia will likely account for most of the growth, the bureau said. Project delays could lead to lower-than-expected output and exports, according to the report.

The bureau estimates Australian thermal coal exports will rise by 6 percent to 149 million tons next fiscal year before increasing at an average annual rate of 9 percent through 2014- 2015. Companies including Xstrata Plc are expected to bring projects into production, it said.

“The forecast today for China’s coal imports is much more robust than what it was 12 months ago,” the bureau’s Copeland said. “It’s fair to say everybody was surprised by the rate at which China’s coal imports have increased.”

Tuesday 2 March, 2010
Bloomberg