Merrill Lynch Analyst Mark Hume said “Over the next two years we believe that a total of 14 Australasian LNG projects, which have a reasonable chance of reaching a final investment decision through 2010–11. Combined, these projects have the potential to add approximately 60 million tonnes per annum of new LNG supply – more than sufficient to meet the majority of our demand gap through 2020.
“This potential supply overhang leaves prospective LNG customers with a broad choice of options. With such a broad pipeline of supply projects, competition for engineering and construction services will intensify, potentially leading to further cost pressures and labour constraints in the LNG service sector,” Mr Hume said.
“Rather than certain projects not making it off the drawing board for lack of available volume demand, we think pricing may well see several projects struggle to make internal corporate hurdle rates. Whilst our supply-demand outlook highlights a clear demand window opening up in 2015, we note that there are at least six Australasian projects all chasing the same demand window.”
The report also notes that demand on the Australian workforce is set to soar with up to 15 projects potentially under construction through 2014–15.
Article continues below…Meanwhile, the Queensland Resources Council (QRC) has said that a skills shortage in the resources sector is an issue that has “risen very sharply in importance” since its last quarterly State of the Sector report, based on a survey of member company chief executives.
QRC Deputy Chief Executive and Director of Skills Policy Greg Lane said “The development of the coal seam gas industry and LNG industries in Queensland at the levels being proposed will need to be matched by the direct and indirect employment of more than 18,000 new employees over the next decade.”
