Challenging Times for Aussie LNG

From The Star Online

Several liquefied natural gas (LNG) export projects face being shelved if they do not adapt to rising cheap competition, French bank Societe Generale (SocGen) said.

The bank said that the prospects of new exporters emerging in the LNG market in the next few years would make it more difficult for current costly projects, mainly in Australia, to compete.

“With rampant cost inflation in the face of an increasingly price-sensitive customer base, these large-scale, expensive projects simply look cumbersome and outdated in the context of intensifying global competition,” the bank said in a research note.

The emergence of the US and Canada as potential major LNG exporters will create a new environment in which Australia will find it more difficult to compete,” the bank added.

A boom in unconventional gas exploration in North America has led to a collapse in US natural gas prices, meaning that potential American exporters will be able to offer their gas at lower prices than Australia, where production costs are higher.

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