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Major Energy Projects to Watch in Australia in 2022
Jun. 30, 2022 01:15PM PST
Here's a brief overview of the major energy projects to watch in Australia in 2022.
With increasing needs for energy, the generation and use of energy is one of the most important cornerstones in any economy or civilization today. Australia is investing hundreds of billions of dollars into major energy projects — investments that will supply the energy for a brighter future.
Coal features prominently in the Australian economy and in the energy sector in particular. It is the second-largest export in Australia, outdone only by iron ore. Natural gas also makes the list at number four.
The energy industry in Australia produces 2.4 percent of the world's energy. Of the energy generated in the country, three-quarters of it is exported — AU$80 billion dollars' worth. Naturally, given the prevalence of coal in its economy, Australia's energy consumption largely relies on coal.
Hydro, wind and other renewables are on the rise, however. In 2020, renewable energy made up 24 percent of the total electricity generation. This number has risen. In a report released in April 2022 by the Clean Energy Council, renewable energy generation was said to comprise 32.5 percent of Australia's generation.
How much has Australia committed to energy projects?
Energy projects now include hydrogen and ammonia projects (classified together in the hydrogen commodity group), battery metals and their associated refineries. From November 2020 to October of 2021, the number of resources and energy projects in major development went up to 367. Battery and electric vehicle-related projects rose by 12 percent.
Since the last report, oil, gas and liquified natural gas (LNG) projects have over AU$11 billion committed to them, although due to COVID-19's impact on prices in 2020, final investment decisions for offshore projects have been deferred.
The value of new projects has jumped dramatically. In 2018, the combined value of publicly announced, feasible, committed and completed projects amounted to around AU$25 billion, and that saw little change through 2019 and 2020. However, in 2021 those combined totals leaped to over AU$200 billion.
Energy projects to watch
As Australia's largest three export commodities are iron ore, coal and liquified natural gas (LNG), it makes sense that projects at the committed stage of development have devoted around 75 percent of their funding to those industries. That means that, of the AU$54 billion dollars in committed stage projects, approximately AU$40.5 billion are on committed projects for iron, coal and LNG.
Here is a brief summary of committed stage energy projects:
Oil and gas
Barossa
Santos (ASX:STO) has the AU$4.8 billion development of the Barossa gas field, 300 kilometres north of Darwin. It is intended to be a source of LNG when the company's Bayu-Undan facility ceases production.
Jansz-Io
A AU$6 billion dollar project from Chevron (ASX:CVX), this project is to add subsea compression technology so that the recoverability of the Jansz-Io field will be enhanced, as well as to maintain LNG supply to trains and a gas plant on Barrow Island.
APA pipeline expansion
This project is an expansion by APA (ASX:APA) to link Queensland with southern markets. The expansion increase is approximately 25 percent.
Port Kembla
Port Kembla is an LNG import terminal on Australia's east coast. It could supply upwards of 75 percent of New South Wales' yearly gas needs, as well as supplying gas on the east coast.
Coal
Eight coal mines are at the committed stage, three are new projects and five are expansions or extensions of already-operational coal mines. The expectation is that these new mines will output 20 million tonnes annually. Committed coal projects increased 27 percent by value from 2020 to 2021.
Lithium
Kwinana
Tianqi (SZSE:002466) is the company behind this project. The plant is for lithium hydroxide used in rechargeable batteries, primarily for electric vehicles and energy storage. Production is scheduled for the fourth quarter of 2022. A Tianqi sell-down to Independence Group (ASX:IGO) included a 49 percent interest in the Kwinana lithium refinery.
Kemerton
Kemerton is Albemarle's lithium hydroxide processing plant in Western Australia. The company expects to complete it by the end of the year, and says the assets of the construction will form the basis of a joint venture with its partner Mineral Resources (ASX:MIN).
Finniss
Finniss is located in the Northern Territory, also with a 2022 first production schedule. Core Lithium (ASX:CXO) is aiming for 175,000 tonnes per year of spodumene concentrate.
Mount Holland
Another Kwinana-area lithium project, this one is owned 50 percent each by Wesfarmers (ASX:WES) and Sociedad Química y Minera de Chile (NYSE:SQM). Production is scheduled for 2024.
Wodgina
Mineral Resources owns 40 percent of the Wodgina project; the remaining 60 percent is owned by Albemarle (NYSE:ALB). The project's capacity is 250,000 tonnes per annum of spodumene concentrate.
What is the outlook for investments in the sector?
An evaluation of the Australian market by Jessica Amir, an Australian market strategist at Saxo Bank, points out, "…(Australia's) share market has outperformed global equities…" and when speaking of the future of investing, says that the commodity and energy sector present investment opportunities. She is recommending looking into the energy sector in Australia for investment.
Don’t forget to follow us @INN_Australia for real-time updates!
Securities Disclosure: I, Ryan Sero, hold no direct investment interest in any company mentioned in this article.
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