(EnergyAsia, January 21 2015, Wednesday) — Due to lower commodity prices, Australia’s earnings from natural resources and energy export earnings will fall by about 10% to A$176 billion in the current financial year to June 30, said the Department of Industry. (US$1=A$1.22).
Earnings from liquefied natural gas (LNG) exports will buck the general trend to rise 4.9% to nearly A$17.6 billion as higher production from the start-up of new export plants will offset the impact of lower prices.
Australia’s gas outlook
unit 2012–13 2013–14 2014–15 forecast %
Production bcm 62.1 62.8 67.2 7.0
LNG export volume Mt 23.8 23.6 26.2 11.2
– real value A$m 15,034 16,745 17,568 4.9
According to the department’s latest Resources and Energy Quarterly report released last month, new production capacity combined with efficiency gains will boost Australia’s commodity export volumes.
“While export volumes are forecast to grow for most key commodity exports, weaker commodity prices will weigh on export earnings,” said the department’s chief economist, Mark Cully.
“While the environment of weaker commodity prices is creating a more challenging operating environment for Australian producers, increased export volumes will continue to support high export earnings in the near term.”
The report noted that commodity prices declined steadily in 2014 in response to substantial increases in global supply rather than lower demand.
“The decline in commodity prices, alongside rising costs in recent years, have created a more challenging operating environment for Australian producers. Despite this, the large investment in capacity is beginning to translate into higher production and export volumes,” it said.
Australia’s oil performance and outlook
The department expects Australia’s crude and condensate production to average 381,000 b/d in 2014-15, with output from the new Balnaves and Coniston upstream projects offsetting declining production from mature fields.
It exports of crude and condensate will rise by about 10% to 280,000 b/d for the year. Export earnings are forecast to fall by A$687 million to A$10.4 billion as a result of lower oil prices and the continued weakness of the Australian dollar.
With the closure of the Caltex refinery in Kurnell last October that will be followed by BP’s Bulwer Island refinery by mid-2015, the department said Australia’s output of refined products will plunge by around 25% to 444,000 b/d.
At the same time, the department expects Australia’s imports of refined products to rise sharply from 423,000 b/d in 2013-14, to 611,000 b/d in the current year.
Australia produced 352,000 b/d of crude oil and condensate in the July-September quarter of 2014, including 10,000 b/d of crude oil from the new Balnaves project in the Carnarvon Basin. The restart of the Vincent oil field and higher output from the Gippsland Basin also contributed to higher production, offsetting lower output from the Fletcher-Finucane project, which was offline for part of the quarter.