Falling commodity prices limiting returns for projects: Deloitte

An LNG vessel at the Queensland Curtis (QCLNG) Project.

An LNG vessel at the Queensland Curtis (QCLNG) Project.

Global commodity prices have now declined to a point that is limiting the returns on past investment, while limiting new investment opportunities, according to Deloitte.

Deloitte Access Economics’ latest Investment Monitor report, suggests that Australia is now well and truly into the export phase of the resources boom, a period where the returns on past investments are cashed in.

The value of projects under construction or committed in Australia decreased by $A4.2 billion over the March quarter, equivalent to a 1 per cent fall from the previous quarter.

Additionally, economic growth remains below trend, with national income growth also lagging.

Gas prices in particular are under pressure from falling oil prices, as LNG exports begin to ramp up with the Australia Pacific (APLNG) LNG and GLNG projects on Queensland’s Curtis Island due to enter commissioning this year along with the $A61 billion Chevron-operated Gorgon Project in Western Australia.

At the same time, Australia remains set for a significant boost in its LNG export capacity, with around 95 per cent of these exports to end up in either China or Japan.

Deloitte Access Economics partner and report author Stephen Smith states that over the next year alone, Australia will add 41 MMt/a of LNG production capacity – approximately 17 per cent of current global demand – while another 21 MMt will be available by 2017 following the completion of the INPEX-operated Ichthys LNG Project.

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