New Major LNG Projects in Australia Will Struggle With Low Oil Price, Says IEA

Australian Mining reported that the International Energy Agency (IEA) believes new major liquefied natural gas (LNG) projects in Australia will struggle to turn a profit due to the low oil prices.
As quoted in the market news:

With another three LNG projects currently in the planning phase, the IEA has said it is unlikely they will progress to construction,Brisbane Times reported. Senior gas expert Costanza Jacazio said that even in a $US60 oil environment, Australian projects could continue, albeit without breaking even.
“Will anything else in Australia proceed beyond this next portion of projects? I think in this environment it is very unlikely,” he said.
The prediction by the IEA has been read as a warning to foreign companies considering investment in the higher-cost Australian economy.
Singapore-based energy forecaster Dr Fereidun Fesharaki described the economics of the planned LNG projects in Australia as a “tragedy”, with planning and costing based on expectations that Asian gas customers would continue to pay historically high prices for the commodity.
“I am looking at oil to average a maximum of $US75 a barrel over the next decade, and even then they just won’t get a rate of return to justify the investment,” he said.
The three projects thrown into doubt are Woodside Petroleum’s Browse FLNG project, the Sunrise venture in the Timor Sea, and ExxonMobil and BHP Billiton’s Scarborough project off Western Australia.

Click here to read the full Australian Mining report.