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Researched by Industrial Info Resources Australia (Perth, Australia)--Australia's liquefied natural gas (LNG) industry is set to benefit from the Free Trade Agreement (FTA) that was signed between Australia and China at the G20 Conference in Brisbane on November 15-16. The FTA is the result of 10 years of negotiations between Australian and Chinese leaders to enhance bilateral trade ties.
The FTA will remove tariffs from 90% of Australia's exports to China during the next four years, including LNG, dairy, meat and horticulture. The FTA also will enable Australian service suppliers to provide technical consulting and advice to Chinese companies on energy-related issues like shale gas extraction and coal bed methane.
China's pledge to cap its growing carbon emissions by 2030 at the G20 Summit indicates that China's demand for natural gas will continue to rise. Some experts have predicted that China's demand for gas will double by 2018.
The Chinese government finds gas to be appealing because it is a reliable source of energy that contains no more than half the emissions of coal. Gas also contains less particulates than coal, which makes up a large part of China's chronic smog problem.
The Chinese government is intent on quelling domestic unrest in China, and the environmental and health problems that are being caused by rising pollution. Australia is well-positioned to benefit from China's rising demand for gas, which is set to become the major substitute for the pollutant-rich coal power plants that provide most of China's power.
In exchange for removing tariffs on Australian LNG exports, Chinese companies will be allowed to bring in skilled workers to Australia for large infrastructure projects. The FTA could help cover local Australian skills shortages, which have been a concern for those involved in the three LNG projects in Queensland. In 2014, the U.S. engineering firm Bechtel Corporation (San Francisco, California) was forced to fly in workers from Ireland and the U.K. to counter the lack of specialty Australian welders.
Another benefit of the FTA is that it may help Australian exporters lock away more of their LNG in long-term contracts. Companies like Chevron Australia Pty Limited (Perth, Australia), which is part of Chevron Corporation (NYSE:CVX) (San Ramon, California), have struggled to lock away contracts, as Asian suppliers are becoming aware of the cheaper prices that will result from the flood of U.S. LNG that will hit the market over the next few years. Chevron has managed to lock away only 65% of its 20-year sales contracts for its Gorgon LNG project in Western Australia, which is expected to become operational in June 2015.
View Project Report - 86000906
The seven LNG projects in Australia have a combined cost of $200 billion, and are due to start exporting gas from Australia between late 2014 and 2017. The two-train, 8.5 million-tonne-per-year QCLNG project at Curtis Island is expected to be the first of the major projects to produce gas by the end of 2014.
View Project Report - 86000854
The China FTA is positive news for QCLNG owner BG Group (Reading, England), which already has locked away 8.6 million tonnes per year of LNG sales to China. In 2010, BG Group and the China National Offshore Oil Corporation (CNOOC) (Beijing, China) signed a 3.6 million-tonne-per-year agreement. This was followed by CNOOC's commitment to purchase a further 5 million tonnes per year from BG Group for 20 years, beginning in 2015. The FTA may encourage other Australian suppliers and Chinese importers to work more closely to commit to long-term LNG contracts.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, three offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.
The FTA will remove tariffs from 90% of Australia's exports to China during the next four years, including LNG, dairy, meat and horticulture. The FTA also will enable Australian service suppliers to provide technical consulting and advice to Chinese companies on energy-related issues like shale gas extraction and coal bed methane.
China's pledge to cap its growing carbon emissions by 2030 at the G20 Summit indicates that China's demand for natural gas will continue to rise. Some experts have predicted that China's demand for gas will double by 2018.
The Chinese government finds gas to be appealing because it is a reliable source of energy that contains no more than half the emissions of coal. Gas also contains less particulates than coal, which makes up a large part of China's chronic smog problem.
The Chinese government is intent on quelling domestic unrest in China, and the environmental and health problems that are being caused by rising pollution. Australia is well-positioned to benefit from China's rising demand for gas, which is set to become the major substitute for the pollutant-rich coal power plants that provide most of China's power.
In exchange for removing tariffs on Australian LNG exports, Chinese companies will be allowed to bring in skilled workers to Australia for large infrastructure projects. The FTA could help cover local Australian skills shortages, which have been a concern for those involved in the three LNG projects in Queensland. In 2014, the U.S. engineering firm Bechtel Corporation (San Francisco, California) was forced to fly in workers from Ireland and the U.K. to counter the lack of specialty Australian welders.
Another benefit of the FTA is that it may help Australian exporters lock away more of their LNG in long-term contracts. Companies like Chevron Australia Pty Limited (Perth, Australia), which is part of Chevron Corporation (NYSE:CVX) (San Ramon, California), have struggled to lock away contracts, as Asian suppliers are becoming aware of the cheaper prices that will result from the flood of U.S. LNG that will hit the market over the next few years. Chevron has managed to lock away only 65% of its 20-year sales contracts for its Gorgon LNG project in Western Australia, which is expected to become operational in June 2015.
View Project Report - 86000906
The seven LNG projects in Australia have a combined cost of $200 billion, and are due to start exporting gas from Australia between late 2014 and 2017. The two-train, 8.5 million-tonne-per-year QCLNG project at Curtis Island is expected to be the first of the major projects to produce gas by the end of 2014.
View Project Report - 86000854
The China FTA is positive news for QCLNG owner BG Group (Reading, England), which already has locked away 8.6 million tonnes per year of LNG sales to China. In 2010, BG Group and the China National Offshore Oil Corporation (CNOOC) (Beijing, China) signed a 3.6 million-tonne-per-year agreement. This was followed by CNOOC's commitment to purchase a further 5 million tonnes per year from BG Group for 20 years, beginning in 2015. The FTA may encourage other Australian suppliers and Chinese importers to work more closely to commit to long-term LNG contracts.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, three offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.
