This month Australia signed the largest trade deal in its history - a natural gas export contract valued at US$41 billion. The Gorgon Project is being brought to life by Chevron and ExxonMobil. Prime Minister Kevin Rudd said the full project would create 6,000 jobs and cost AU$50 billion. By 2014 when the project is on-line Australia will surpass Qatar as the world’s leading exporter of natural gas. Some economists predict the economic injection of Gorgon Project to exceed the multi-billion Federal intervention in the economy.
It’s great news for the economy - and provides wonderful quotes for politicians:
“This unprecedented export deal confirms Australia’s importance as a global energy superpower supplying vital clean energy resources and technologies to China and our other Asia-Pacific trading partners,” Resources Minister Martin Ferguson said. (Source: Agence France Presse)
It’s also good news for economies in Asia. Australia’s proximity means shorter shipping times and no need to pass through conflict zones in the Middle East. For Australians the sheer scope of the project is hard to fathom. Considering oil and gas analysts also find the scale staggering it is no wonder:
Asian demand for coal and iron ore have helped Australia’s economy avoid recession during the global downturn but State One Stockbroking analyst Peter Kopetz said LNG was the next boom commodity. The gas is liquefied for shipping abroad, where it is turned back into gas and distributed via pipeline.
“The numbers are phenomenal. When you look at them it’s mind-boggling,” he said. “It’s going to be LNG boom times.”
Australia exported 15.2 million tonnes of LNG worth 5.2 billion dollars in 2006, a figure the government estimates will quadruple to 60 million tonnes by 2015 if all currently planned projects proceed. (Source: Agence France Presse)
The challenge remains, though, for politicians and others guiding the economy. With robust growth planned from minerals and now gas, Australia will continue to have a two-gear economy. Our commodity exports will be trebling in volume and value, while the “old economy” of services and manufacturing will fight to stay competitive. With billions pumped into the economy due to gas exports, it will be hard to keep interest rates at reasonable levels.
So while Australia may become “the Middle East of Gas” it doesn’t mean every Aussie will be flying first class to buy the latest season’s clothing at Harrods.
