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posted on:
November
13
2012

BHP planning to bypass Australian gas market

 

In a move the flies in the face of Minister Ferguson’s plan for Australia to become a world leader in gas exports, BHP has stated their intention of extracting gas from the US and transporting to Asia instead of exporting from Australia. Despite the geographical divide of the Pacific Ocean, compared to the comparatively miniscule Torres Strait, gas exported from the US is more attractive to BHP and its Asian customers.


 Several factors have conspired to create a situation where the company, whose origins lie in the rich mineral fields of Broken Hill to sidestep Australia entirely. Firstly, the gas boom in the US has expended the reserves there and created a glut of cheap gas. Secondly, plans to expand the Panama Canal in 2014 would make shipping from the East Coast and Gulf of Mexico viable for LNG tankers. Thirdly, an expanding Asia is seeking secure cleaner fuels in a world of decreasing coal use and one where the zenith of nuclear has been reached. Finally, the elephant in the room: the ‘uncompetitive’ landscape of Australia for mining projects.


 The latter most point is obviously the most salient for Ferguson and others as it is the only variable within the control of the Government. Has the policy package of the carbon pricing mechanism and resource rent tax, as well as the high AUD caused foreign companies to literally give Australia a wide berth? The truth is that the Government cannot have it cake and eat it too. It cannot, in the case of Treasure Wayne Swan, grandstand as a Robin-Hood hero against the evils of the mining bourgeoisie and inherent ownership of all Australians over the dirt and shiny things in the ground, and then promote Australia as a utopia of foreign investment, exploration and mining. The White Paper expressed desire for Australia to become a land of competitive production costs, a place of little red-tape and strong labour forces; in short a haven for investment. The reality, it seems, is not going to plan.