Knock knock – McKinsey sizes up the natural gas opportunity

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24 July 17, 1:52pm Restricting LNG exports to boost domestic gas supply could deter the investment needed to maintain current supply https://t.co/uAFm0a1kOD
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14 July 17, 10:28am QLD provides template that other states can use for safe, sustainable & successful onshore gas development #auspol https://t.co/qV8RfIocF0
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7 July 17, 10:29am Aust #LNG exports to jump from $23B to $37B in next 2 years, but policy changes needed to secure these benefits.… https://t.co/5WaYm01CZg
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5 July 17, 3:03pm Australian average wholesale gas prices are below Asian average: report. Prices are higher in Japan, China, S Korea https://t.co/qDGkYbMZfE
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LNG Projects

Knock, Knock, a recent report by McKinsey & Company estimates that the commissioning of all the $180 billion LNG projects currently on the drawing board in Australia will increase national GDP by 1.5 per cent, create about 150,000 jobs and deliver tax revenues equal to nearly half the total federal debt.

The encouraging thing, the consultants add, is that this is happening when Asia needs much more gas over the next two decades, Australia has plentiful reserves, we are in the right geographical place and we have a long history of reliable supply to Asian customers.

On the debit side, the cost of building new LNG projects in Australia has increased tremendously in the past decade and is now 20 to 30 per cent higher than that of the competition in North America and East Africa.

Another important aspect, McKinseys point out, is that the window of opportunity for Australia to capture a higher share of the global LNG trade may shut because of factors as diverse as China developing its own shale gas industry or Japan changing its power generation mix.

“Australia faces a choice,” say McKinseys. “If it tackles the productivity gap, it can continue to create significant wealth from LNG. If the window of opportunity closes, much economic gain will be lost.”

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