Australia May Avenge World Cup Loss to Qatar in Global LNG Race

Australia May Avenge World Cup Loss to Qatar in Global LNG
An aerial view of the Gorgon site, located above the tanks, on Barrow Island in Western Australia. Source: Chevron Corp. via Bloomberg

Australia, defeated by Qatar in a bid to host the 2022 World Cup soccer tournament, may overtake the Persian Gulf nation in liquefied natural gas production in 10 years, Sanford C. Bernstein & Co. analyst Neil Beveridge said.

LNG output in Australia may increase to 80 million metric tons a year by the end of the decade from 20 million tons a year now, the Hong Kong-based analyst said in a telephone interview today. Depending on how many projects are approved, Australia may vault to first among LNG producers and surpass Qatar, he said. Australia was fourth-largest in 2009, behind Qatar, Malaysia and Indonesia, according to BP Plc data.

“Australia is in a sweet spot,” Beveridge said. “The expansion we’re going to see over the next 10 years will be very significant and will take Australia into a competitive position with Qatar as the world’s largest supplier of LNG.”

Soccer’s governing body awarded Qatar, holder of the world’s third-largest gas reserves, the 2022 tournament yesterday after a secret vote at FIFA’s headquarters in Zurich, defeating the U.S., Japan, South Korea and Australia. Hosting the event is worth about $5 billion, according to U.S. estimates.

A projected glut of LNG won’t last as Asia, the Middle East and Latin America drive global demand higher by an average 8 percent annually over the next five years, Bernstein analysts, including Beveridge, wrote in a report today. Australia will benefit the most as consumption rises and supply is limited partly because of a moratorium on new ventures in Qatar, the report said.

Cost Overruns

Chevron Corp. is advancing with the A$43 billion ($42 billion) Gorgon LNG project off northwest Australia, and BG Group Plc on Oct. 31 said it would proceed with a $15 billion LNG venture in Queensland. Woodside Petroleum Ltd. is due to start the A$14 billion Pluto development in August 2011, converting gas to liquid form for export.

The Australian LNG industry faces threats to that projected growth, Bernstein’s Beveridge said. “The big issue is around the potential for cost overruns and delays,” he said. “But there isn’t a lot of competition out there to Australia.”

Australia was selected to host a global LNG conference in 2016 that’s expected to attract more than 4,000 participants from 70 countries, Western Australia Premier Colin Barnett said last month. Qatar also was under consideration for the event, which Energy Minister Martin Ferguson said is the world’s biggest LNG conference.

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