LNG earnings soar
QUEENSLAND’S three LNG projects have become a huge cash generator with estimates they will export about $ 11 billion this year, signalling a major turnaround for the sector that is now expected to overtake coal as Australia’s second biggest export.
LNG has become the success story of the commodity sector and a report from the Federal Government’s chief economist said Australia’s resources and energy export earnings would reach record highs this financial year of $ 230 billion.
Booming exports from Queensland, particularly for coking coal, are also expected to deliver a royalties windfall of an extra $ 1 billion above forecast for the State Government. But the report also warned that Queensland’s export performance could be impacted by rail freight company Aurizon’s plans to reduce maintenance on its line to fit new draft undertakings from the Queensland Competition Authority which will affect about $ 4 billion in coal exports.
“Miners in Queensland could be expected to build stockpiles to make sure that they are ready to transport coal when or if the rail transport system returns to previous capacity levels,” the report said.
The three LNG projects, which cost about $ 65 billion to develop, came on stream at the same time as a huge downturn in demand and prices.
In 2015, LNG prices fell 42 per cent but have rebounded 21 per cent. The chief economist report said LNG exports would hit $ 30.4 billion this year, a rise of more than $ 8 billion.
They were expected to reach $ 38.8 billion by 2022- 23 as more projects come on stream.
APPEA chief executive Dr Malcolm Roberts said the data confirmed how significant LNG exports were to Australia’s economic growth. “With Australia’s abundant supplies of natural gas, the outlook should be extremely positive. But for LNG to continue to be a pillar of the nation’s economy … exploration and development must be fostered, not restricted.’
The Queensland Resources Council said despite the positive numbers the biggest dark cloud on the horizon was Aurizon’s threat to halt 20 million tonnes of coal exports.
“That is a loss of $ 4 billion in exports and $ 500 million in royalties which help pay for the teachers, nurses and police,” QRC chief executive Ian Macfarlane said.
While commodity exports will hit a record this year, the Federal Government was tipping it to be the peak and a decline will follow over the following two years to about $ 216 billion as low cost iron ore enters the market.
It also tipped a fall back to earth for coking and thermal coal as demand weakened and supply was boosted.
But there was a bright outlook for aluminium, copper, bauxite and zinc – all commodities that were produced in Queensland.