Australian Shale Gas Market (Historical Data Series)

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Australia is a net exporter of LNG and exported 57% of production in 2009. Japan and China are the biggest markets for this gas accounting for 65% and 20% of exports respectively.

Since the late 1980s production of natural gas has exceeded consumption in Australia, and the gap has widened over the years. Coal is the main fuel used in power stations and natural gas accounts for just less than one fifth of energy usage. This fuel mix may change in the future as 33 coal-fired plants have been proposed with a combined capacity of 20,635 MW compared to 83 gas-fired power plants with a capacity of 27,457 MW. A total of 1,930 MW of gas capacity is under construction. Furthermore a total of 15,903 MW of intermittent renewable capacity, i.e. solar and wind, has been proposed and 1,347 MW is under construction which will need ‘back-up’ from other fuel sources to meet demand when winds are not blowing or the sun is not shining. Currently gas-fired plants are the best fit.

Therefore the development of unconventional natural gas reserves is expected to meet export demand more than domestic consumption. Hence most of the developments in shale and other unconventional have attracted interest from overseas investors. Most of the interest has been in the country’s coal bed methane than shale gas and the focus in 2010 was on coal bed methane in Queensland. Last year Shell and PetroChina formed a joint venture to acquire Arrow Energy, a coal bed company for AUD 3.7 billion to complement Shell’s existing assets in the region. Another LNG project near Gladstone attracted Total and the Korean Gas Corporation (KOGAS) as buyers when Santos and Petronas sold their share in the asset.

The high interest in LNG from Asian investors reflects the export market demand. In 2009 Australia mainly exported LNG to seven major markets. Japan, China, South Korea and India accounted for 65%, 20%, 7% and 5% of trade respectively.