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Explore Australia

Australia's economic performance is among the best in the world and the outlook remains positive. Australia's diverse, multicultural society has a very high standard of living and a long-standing, democratic culture based on the rights of the individual and the rule of law. Australia is politically stable and enjoys a high degree of social harmony.

Australia is an attractive investment location with abundant energy resources for development and export, a stable business environment with active participation by some of the largest multinational companies in the world, close proximity to the major demand markets of Asia and access to a highly skilled workforce and innovative technologies.

There are no government-owned resources companies and no requirement for government participation in resources projects. The Australian Government does not apply export controls to liquefied natural gas (LNG) projects.

With a regulatory framework that keeps pace with financial market developments, Australia possesses an internationalised currency, no foreign exchange controls, and a highly effective intellectual property rights regime.

With a Gross Domestic Product (GDP) of US$1.5 trillion, Australia is the 12th largest economy in the world and the 4th largest in the Asia region. Australia has enjoyed many years of uninterrupted economic growth, including during the global financial crisis of 2008. Since a brief recession in 1991, the Australian economy has experienced an average GDP growth of 3.3 per cent per annum. Its forecast economic growth rate between 2015 and 2019 is the highest among major advanced economies.

The Australian economy has continued to prove its resilience throughout the global financial crisis. Sound macroeconomic policies and structural reform during this time increased Australia’s responsiveness to shifts in the global economy and enabled Australia to better withstand global economic pressures to maintain strong economic fundamentals. Australia’s strong credit rating and impressive economic performance over the past decade has been the envy of many economies in the world. Australia remains one of only nine countries rated AAA with a stable outlook by three major international credit rating agencies, Moody’s, Standard & Poor’s and Fitch.

In terms of real GDP, Australia’s economic growth in 2010-14 was 2.7 per cent and is forecast to reach 3.0 per cent in 2015-19. Recent economic data suggests that domestic production for key commodities will increase consistently over the next few years as Australia begins the transition from the construction phase to the production phase, with a corresponding robust growth in export volumes and export earnings.

Australia has been rated the third freest economy in the world by The Wall Street Journal and The Heritage Foundation, 2014 Index of Economic Freedom. The index tracks the progress of economic freedom around the globe and provides evidence of dynamic gains from greater economic freedom. From 186 economies, Australia ranks third behind Hong Kong and Singapore. The survey states that Australia continues to set the standard for clean, corruption-free government and benefits significantly from its transparent and efficient business environment, and open-market policies.

Australia is building on its position in the Asia-Pacific region and has established a network of Free Trade Agreements (FTAs) with key trading partners in the region. Australia has nine FTAs currently in force with New Zealand, Singapore, Thailand, US, Chile, the Association of South East Asian Nations (ASEAN) (with New Zealand), Malaysia, Korea and Japan. The countries covered by these FTAs account for 42 per cent of Australia's total trade. Australia concluded FTA negotiations with China in November 2014. The agreement will enter into force when domestic processes have been completed. China accounts for 23 per cent of Australia’s total trade. Australia is currently engaged in six other FTA negotiations - two bilateral FTA negotiations: India and Indonesia; and four plurilateral FTA negotiations: the Trans-Pacific Partnership Agreement (TPP), the Gulf Cooperation Council (GCC), the Pacific Trade and Economic Agreement (PACER Plus), and the Regional Comprehensive Economic Partnership Agreement (RCEP). The additional countries covered by these negotiations account for a further six per cent of Australia’s total trade.

General facts – Australia

 
Area (kilometres2) 13 590 000 (land area – including Australian Antarctic Territory  of 5 900 000)
Offshore marine jurisdiction (kilometres²) 14 620 000 (marine area – including the Exclusive Economic Zone, Territorial Sea and Extended Continental Shelf)
Population (million) 23.0
Official Language English
Capital Canberra (population 0.38 m)
Main Cities Sydney (4.6m), Melbourne (4.1m), Brisbane (2.0m), Perth (1.7m), Adelaide (1.2m), Hobart (0.2m), Darwin (0.1m)
System of Government Federation (Commonwealth) of:
  • six states – New South Wales, Queensland, South Australia, Tasmania, Victoria and Western Australia;
  • three mainland territories – the Northern Territory, the Australian Capital Territory and the Jervis Bay Territory; and
  • seven external territories – Ashmore and Cartier Islands, Australian Antarctic Territory, Christmas Island, Cocos (Keeling) Islands, Coral Sea Islands Territory, Heard and McDonald Islands and Norfolk Island.
  • Parliamentary democracy based on Westminster system; Federal Parliament consisting of House of Representatives and Senate.

Key offshore petroleum statistics

  2008-09 2009-10 2010-11 2011-12 2012-13 2013-14
Employment Oil and Gas Extraction 14 360 14 538 12 907 14 908 20 359 24 178
Offshore Exploration Expenditure ($m) 3 318 2 746 2 559 2 277 3 430 3 512
Exports Oil and Gas Extraction ($m) 22 204 20 309 25 312 27 361 28 068 30 881
Imports Oil and Gas Extraction ($m) 30 021 27 546 33 557 39 997 40 766 42 388
Active Offshore Exploration Permits 215 216 214 210 210 189

Source: Department of Industry and Science, Resources and Energy Quarterly, March 2015

Why explore for oil and gas in Australia?

The probability of finding a new petroleum province in Australian waters remains high.

The first Australian exploration permit was granted in 1959 in the Gippsland Basin. As at May 2015, there are currently 189 offshore exploration permits, 58 retention leases and 92 production licences. From the first oil and gas discoveries in Bass Strait, the North West Shelf and the Timor Sea through to more recent discoveries in the Carnarvon and Browse basins, there is no doubt that offshore Australia is one of the world’s most highly prospective areas for petroleum.

Australia is a gas-rich nation. According to the Australian Energy Resources Assessment, around 92 per cent of Australia’s 158 trillion cubic feet of known conventional natural gas resources are located in the Carnarvon, Browse and Bonaparte basins off the north-west coast of Australia. Known gas resources are also located in south-west, south-east and central Australia, along with large coal seam gas resources in the coal basins of Queensland and New South Wales and the potential for shale and tight gas resources in South Australia, Western Australia and the Northern Territory. Despite this, much of the continent and its offshore areas remain underexplored, and in some areas unexplored, with over 40 onshore and offshore basins awaiting in-depth exploration to determine their full potential.

In 2008, the United Nations Commission on the Limits of the Continental Shelf (UNCLOS) confirmed the location of the outer limit of Australia’s continental shelf, which resulted in the extension of Australia’s jurisdiction over an additional 2.56 million square kilometres (km2) of seabed. Australia now has more than 14.62 million km2 of maximum seabed territory, which is in the top three largest marine jurisdictions in the world along with the United States of America and France. Australia is now custodian to around 4 per cent of the world’s total seabed, an area with significant untapped exploration potential.

Australia's geographic location ensures it is well placed to meet the rapidly expanding energy needs of the
Asia-Pacific region.

The strong consumption growth of oil in non-OECD markets and the sound outlook for LNG in the Asia-Pacific region, together with relatively resilient petroleum prices, provide the economic drivers for ongoing investment in exploration in Australia. Increased demand for energy with the industrialisation of China and India, and other emerging Asian economies, underpins these positive market conditions.

Some attributes that make Australia an attractive location for offshore oil and gas exploration include:

  • the regular release of new exploration acreage covering a range of regions from mature to frontier
  • access to high quality geoscientific data and analysis at low or no cost
  • continued government support of pre-competitive geoscientific exploration, data acquisition and analysis
  • a free market philosophy which welcomes foreign investment – Australia has no mandatory local equity

requirements and no government-owned petroleum companies

  • close proximity to markets in the growing economies of the Asia-Pacific
  • an attractive policy and legal framework for oil and gas development, conducive to companies of all sizes
  • security of title with the right to retain and/or develop a discovery, subject to meeting the specified terms of a retention lease or a production licence
  • transparent and practical regulatory requirements covering all stages of petroleum operations
  • expanding physical infrastructure, sophisticated technical and services support, a highly educated workforce and pool of skilled petroleum professionals
  • an internationally competitive profit-based tax system
  • government assistance with project facilitation, including fast-tracking of approvals processes for declared major projects, and
  • an open and competitive economy, including deregulated banking and foreign exchange arrangements,  a sophisticated capital market and a good record of industrial harmony.

Australia – a resource rich nation with further growth potential

Australia has an enviable history in the successful development of its abundant natural resources.

According to the Australian Government Department of Industry and Science, Australia’s energy and mineral commodity resource export earnings are forecast to be $179 billion in 2014-15.

Global LNG trade will grow rapidly to 2020 as Australia emerges as the world’s largest LNG exporter. New LNG projects will triple Australia’s export capacity and double total gas production.

Australia also has over 300 crude oil fields with most production coming from six major basins: the Carnarvon, Browse, Bonaparte and Perth Basins offshore Western Australia and the Gippsland and Bass Basins off south-eastern Australia. Australia has about 0.3 per cent of world oil reserves. There is scope for growth in Australia’s oil reserves in existing fields, and for new oil discoveries in both proven basins and in underexplored frontier basins that are prospective for petroleum. In 2012, Australia’s total demonstrated oil resources were estimated at 20 664 PJ.

Realising Australia’s petroleum potential

Offshore petroleum exploration

Australia has the potential for further discoveries of oil and gas with many offshore basins remaining largely, or entirely, unexplored. This potential has been grasped by companies with around $3.5 billion spent on private offshore petroleum exploration in Australia in 2013-14.

Only around 20 per cent of Australia’s offshore basins are currently covered by petroleum titles. Although exploration activity is primarily focused on finding resources close to existing discoveries to improve the economics of proposed projects, frontier exploration is growing. Australia’s underexplored frontier basins hold the greatest promise of making a major new discovery. To encourage exploration in these areas and help reduce the risk of exploration, Geoscience Australia through Australia’s Offshore Energy Security Program has undertaken a series of programs aimed at providing pre‑competitive and geological information aimed at improving the understanding of the petroleum prospectivity and resource potential of frontier basins.

In general, offshore petroleum exploration activity in Australia has remained steady in recent years.

Offshore petroleum development

The Australian petroleum industry is entrepreneurial, innovative and has achieved significant success as recent development projects under consideration and under construction show (see below table). It is made up of a number of small, medium and large companies, many of whom operate on the international scene. Australia's modern legal framework, petroleum tenement system, favourable taxation regime and economic environment explain Australia's consistent high ranking in international investment surveys.

Australia’s LNG development projects (as at February 2015)

Name
Type
Proponent

 

Location
Basin
Plant
Final Investment Decision and First Gas Size Cost
In Operation

 

North West Shelf Woodside (Op16.67%) Shell (16.67%)
BP (16.67%)
Chevron (16.67%)
BHP Billiton (16.67%) MIMI (16.67%)
CNOOC (gas and associated liquids 5.3%)
WA
Carnarvon
Karratha
Existing 16.3Mtpa
5 trains
A$29.5b
Darwin LNG ConocoPhillips (57.15%)
ENI Australia (10.99%)
Santos (11.39%)
INPEX (11.27%)
TEPCO & Tokyo Gas (aggregate 9.2%)
NT
JPDA
Darwin
Existing 3.6Mtpa
1 train
not available
Pluto Train 1
LNG
Woodside (Op 90%)
Tokyo Gas (5%)
Kansai Electric (5%)
WA
Carnarvon Karratha
FID 2007
FG  2012
4.3Mtpa
1 train
A$14.9b
Woodside
Queensland Curtis LNG BG Group (Op, 50% T1, 97.5% T2)
CNOOC (50% in T1)
Tokyo Gas (2.5% in T2)
QLD
Bowen and Surat
Gladstone
FID Oct  2010
FG Train 1 in Jan 2015
Train 2-2015
8.5Mtpa
2 trains
A$20.4b BG Group
In Construction
Gorgon
LNG
DomGas
Chevron (Op 47.333%)
Exxon (25%)
Shell (25%)
Osaka Gas (1.25%)
Tokyo Gas (1%)
Chubu (0.417%)
WA
Carnarvon
Barrow Is.
FID 2009
FG  2015-16
LNG:
15.6Mtpa,
3 trains
Dom gas: 150Tj/d to
300 Tj/d

 

A$54b
Chevron
Prelude Floating LNG
Condensate
Shell (Op 67.5%)
INPEX (17.5%)
KOGAS (10%)
OPIC (CPC Taiwan) (5%)
WA
Browse
FLNG
FID May 2011
FG 2017
3.5Mtpa
1 train
F LNG
A$12.6b estimate
Wheatstone
LNG
DomGas
(potential for third-party gas)
Chevron (Op 64.14% facilities, 80.17% gas fields)
Apache (13% in facilities) (sale of interest to Woodside pending FIRB approval)
KUFPEC (7% in facilities)
Shell (6.4% in facilities, 8% in gas fields)
Kyushu Electric (1.46% facilities, 1.83% gas fields)
PE Wheatstone (8%-facilities, 10%-gas fields)
WA
Carnarvon
Onslow
FID Sept 2011
FG 2016
LNG:
8.9Mtpa
2–5 trains
Dom gas: 265Tj/d
A$29b
Chevron
Ichthys
LNG
Condensate
INPEX (Op 66.070%)
Total (30%)
Tokyo Gas (1.575%)
Osaka Gas (1.2%)
Toho Gas (0.42%)
Chubu Electric (0.735%)
WA
Bonaparte
Darwin
FID Jan 2012
FG 2017
8.4Mtpa
2 trains
A$33b INPEX
In Planning
Equus LNG
(going to NWSV for processing)
Hess (100%) WA
Carnarvon
Karratha
FID 2015
FG not available
~2Mtpa not available
Scarborough FLNG BHP Billiton (Op, 50%)

Exxon (50%)

WA
Carnarvon
FID not available
FG not available
na
(10Tcf)
not available
Sunrise
LNG
Condensate
Woodside (Op 33%)
ConocoPhillips (30%)
Shell (27%)
Osaka Gas (10%)
NT/JPDA
Bonaparte
FID not available
FG not available
not available not available
Browse
FLNG
Condensate
Woodside (Op 34%/17% East/West Browse)
Shell (25%/35%)
BP (16.67%/20%)
PetroChina (8.33%/20%)
MIMI (16.67%/8%)
WA
Browse
FLNG
FID not available
FG not available
12Mtpa
3 trains
not available
Coal Seam Gas LNG
In Construction
Gladstone LNG Santos (Op, 30%), Petronas (27.5%)
Total (27.5%)
KOGAS (15%)
QLD
Bowen and Surat
Gladstone
FID Jan 2011
FG 2015
7.8Mtpa
2 trains
A$18.5b Santos
Australia-Pacific LNG Origin Energy (37.5%), ConocoPhillips (37.5%)
Sinopec (25%)
QLD Bowen and Surat
Gladstone
FID(T1) Jul 2011; (T2) Jul 2012 FG T1 2015 9Mtpa
2 trains
A$24.7b Origin

Australia’s domestic gas market

The Australian domestic gas industry has strong growth potential, paralleling growth in the industrial, minerals processing and electricity generation sectors.

In 2014-15, Australia is forecast to produce 67.1 billion cubic metres (bcm), an increase of 6 per cent year on year. Australia’s gas production is projected to increase at an average annual rate of 17 per cent over the period to 2018-19, with gas production projected to more than double to 145.6 billion cubic metres by 2019-20.

Over the last 20 years, Australia’s domestic natural gas industry has grown from a relatively small base to being the third most significant domestic energy source after coal and oil.

Domestic gas market reform over the past decade has increased transparency and competition in the sector, as well as brought industry regulation under the national energy framework in line with electricity. Former Ministerial Council on Energy initiatives such as the National Gas Law and National Gas Rules, National Gas Market Bulletin Board and the Short Term Trading Market for gas have provided a framework for greater transparency and promoted the use of natural gas for domestic consumption across Australia.

Significant expansion and integration of Australia’s domestic gas transmission and distribution network in recent years, particularly in south-eastern Australia, has facilitated growth in established gas markets and introduced gas into new regional centres.

This is enhancing basin-on-basin competition for the supply of gas that will be beneficial to gas consumers while also encouraging the development of new industries and increasing opportunities for suppliers to commercialise gas discoveries.

New offshore domestic gas projects are currently under development in Western Australia and in the Gippsland and Otway Basins off southern Victoria. In addition, there are a number of gas pipeline projects underway in South Australia, Victoria, Queensland and New South Wales which will further integrate the pipeline network and enable gas from new upstream developments to be transported to domestic gas markets as appropriate.

References

Australian Bureau of Statistics, Cat. 1345.0 – Key Economic Indicators, 2015

Australian Bureau of Statistics, Cat. 8415.0 – Mining Operations, Australia, 2012-13

Australian Trade Commission, 2014 Austrade Benchmark Report, 1 May 2015

Australian Trade Commission, Investor Updates – Data Alert, 1 October 2014

Department of Foreign Affairs and Trade, About Australia, 1 May 2015

Department of Foreign Affairs and Trade, Free Trade Agreements, 1 May 2015

Department of Industry and Science, Resources and Energy Quarterly, March 2015

Department of Industry and Science, Australian Petroleum Statistics, Issue 223, February 2015

Geoscience Australia, Australian Energy Resource Assessment 2012

Geoscience Australia, Oil and Gas Resources of Australia, Petroleum Reserves by Basin