Gas – and now gas transport... has been saved
Gas – and now gas transport...
...among 25 reasons to be confident about growth
24 March 2014: With Australia’s gas resources already one of Fantastic Five economic growth drivers identified by professional services firm Deloitte, the transport of those resources to market has emerged as another future wealth-creating opportunity for Australia.
According to the full release of Deloitte’s Positioning for prosperity? Catching the next wave report, 25 sectors – including gas transport – present tantalising growth opportunities for Australia into the future (see table below).
Deloitte National Oil and Gas Leader Mike Lynn said that when it came to natural gas, Australia’s world-class resources and its proximity to the world’s fastest growing markets in Asia meant the country enjoyed real comparative advantage.
“Australia is at the nexus of a magic mix of global supply and demand when it comes to gas,” he said.
“As countries seek to improve air quality and reduce greenhouse emissions, they are turning to gas as an energy source that is much cleaner and greener than coal or oil.
“We have vast reserves of conventional and unconventional gas and $200 billion worth of new infrastructure under construction and due to come online by 2017, just as global demand is booming.”
It has also been estimated that there is up to another $180 billion in gas projects under consideration in Australia. If these were all to go ahead, they could create 150,000 jobs and deliver tax revenue of $5 billion a year.
“Tapping and exporting gas is likely to continue to be one of Australia’s brightest growth engines for the next two decades, with output growth expected to be faster than that of any other sector,” Mr Lynn said.
“And moving our gas from where it surfaces – offshore such as in Western Australia or from Queensland’s coal seam gas fields – to export points takes a lot of transportation infrastructure covering thousands of kilometres of country.
“Specialised design for our uniquely harsh conditions, sophisticated engineering, robust manufacturing, and delivery and installation services suitable for our delicate and highly regulated environment are all going to be critical.
“And if we get it right, our world-class capability will also be highly sought after in other countries developing their own gas reserves.
“This rapidly growing natural gas industry therefore has the potential to help transform a huge number of small service companies located in communities around the gas basins into larger multi-state players.”
While gas and its transportation are clearly ‘next wave’ growth drivers, the Deloitte report still warns of question marks over whether Australia can continue to attract the high levels of investment needed to capitalise on our natural good fortune.
“The reality is that we are becoming a high-cost, high-regulation and somewhat fickle investment destination and there is a real risk that we get passed by, that demand and the investment to meet that demand goes somewhere else,” Mr Lynn said.
“Even ignoring the impact of the high A$, the cost of labour and critical inputs has skyrocketed in Australia over the past few years, and this has made the cost of building gas projects higher in Australia than alternatives such as East Africa and North America.”
The report says Australia should start by controlling what it can, which primarily means taxes and regulations.
The full release of Positioning for Prosperity? Catching the next wave, the third in Deloitte’s Building the Lucky Country series, analyses growth prospects across all major parts of Australia’s economy. The report highlights Australia’s:
- Current growth wave: mining, which presently represents about 10% of our economy
- Next growth waves: the ‘Fantastic Five’ sectors of gas, agribusiness, tourism, international education and wealth management. If we address the barriers to their success, Deloitte estimates these could be worth an extra $250 billion to the economy over the next 20 years, have the potential to match mining and keep Australia near the top of the world’s prosperity charts
- Future growth waves: 19 growth pockets that, if they have the same relative potential to unlock growth, could contribute at least a further $150 billion to Australia’s economy. More importantly, these growth pockets are mainly in high job creating areas of the economy.
Collectively, these sectors, the ‘Deloitte Growth 25’ (DG25), represent a group of compelling growth opportunities for Australia over the next 20 years. A companion media release considers the national impacts of the full DG25.
NB: See our media releases and research at www.deloitte.com.au
Last Updated: Friday, 28 March 2014
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