The Australian Petroleum Production & Exploration Association (APPEA) has highlighted that Australia’s upstream oil and gas industry is key to supporting the nation’s economic recovery from COVID-19, with opportunities to secure a new phase of long-term investment and growth, and create jobs.
Outlined in its report – Australia’s oil and gas industry: Kick-starting recovery from COVID-19 – undertaken by Ernst & Young (E&Y), APPEA advises that securing investment requires confidence in new exploration and active steps to improve Australia’s competitiveness through effective policy setting.
Chief executive Andrew McConville said while the report acknowledged the strong headwinds and challenges brought on by COVID-19, unlocking new energy resources at scale will help to build wealth, economic resilience and whole-of-economy gains for Australia.
“Delivering these benefits will require investment in new exploration and production projects and this is dependent on having the right investment settings in place. Currently, there are barriers to investment and additional interventions being proposed are an even greater disincentive,” McConville said.
He added that a decade of regulatory instability and market interventions in Australia, coupled with being a relatively high cost investment destination, has reduced investment confidence in many industries, including oil and gas.
“So we must address Australia’s competitive position through effective policy settings to encourage, rather than deter, long-term investment. Without concerted action, Australia’s ability to harness new investment will be greatly diminished,” McConville said.
In addition, the research found that more than 220,000 jobs will be created over the next two decades, with the national economic output estimated to increase by more than $350 billion if key oil and gas projects currently in the pipeline come to fruition – including the Northern Territory’s Beetaloo Basin.
Most of Australia’s key LNG projects are in Western Australian and the Northern Territory, with the two states responsible for about 71 per cent of Australia’s LNG production capacity.
For more than 30 years, the offshore North West Shelf (NWS) project has provided Western Australia with a reliable supply of domestic gas, while facilitating the exports of LNG throughout the globe.
The E&Y report forecasts there is likely to be an increase in LNG developments in WA and the NT, with three more LNG projects in Queensland representing up to 29 per cent of production capacity. There is great potential for projects in new gas provinces like the Beetaloo Basin, opportunities in the Great Australian Bight and increased activity in the Otway Basin, particularly for players like Beach Energy.
In addition, E&Y also found that the gains from reinvigorated activity in the oil and gas industry have the potential to spread throughout the economy, providing a kickstart for Australia’s industrial base by lowering energy prices, boosting demand for services, and generating wealth for all Australians.
“Australia is a globally pre-eminent exporter of energy with a long-standing track record as a stable and low-risk destination for major investment which capitalises on our world-class resource endowments,” the report outlined.
While Australia’s oil and gas industry is currently going through considerable disruption due to COVID-19, E&Y concluded that in the face of these pressures, the industry has a major role to play in continuing to support Australia’s economic recovery.
The report suggests that this will be through securing a new phase of investment and growth, creating jobs, and helping the long process of repairing public finances.
“As the economy continues to recover from COVID-19, the industry stands ready to provide energy security for homes and manufacturing businesses, generate jobs through exploration and new operations, and provide taxation revenue to build schools, roads and hospitals and strengthen our economy,” McConville concluded.