Knock knock – McKinsey sizes up the natural gas opportunity

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20 April 17, 11:37am More gas, not less, is the way to reduce emissions. Climate Council out of step with research & real-world results… https://t.co/keoNgADqd4
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19 April 17, 8:34am Higher taxes on gas would cut gas production, push prices higher & cost Australian jobs #auspol #energysecurity https://t.co/QbR0ZiEBCu
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18 April 17, 5:55pm AiGroup’s half-baked policies would cut investment in gas projects. Don't put in new barriers to expanding supply https://t.co/URnbVSbyq8
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18 April 17, 9:21am Constructive politics: QLD minister proposes state & Commonwealth work with gas producers to increase supply #auspol https://t.co/U2iN4eoXZB
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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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