Media release: Australia at risk of losing its energy edge as gas investment stalls, report finds

Australia is losing its competitive edge in attracting investment in natural gas exploration and production, threatening the nation’s energy security, economic growth and emissions reduction targets, a new report by Wood Mackenzie has found.  

The ‘Australia’s Natural Gas Investment Competitiveness’ report found that while global investment in gas exploration has grown by nearly 30 per cent in the past five years, investment in Australia is lagging with just 15 per cent growth recorded over the same period. The analysis included a CEO sentiment survey of Australian gas producers. 

Wood Mackenzie’s analysis also found: 

• 95 per cent of those surveyed believe Australia is a less attractive place to invest today, compared with five years ago 

• More than 95 per cent of those surveyed reported direct investment impacts from changing government policy and regulatory settings 

• One in five affected projects were either cancelled or relocated offshore  

• Australia is now attracting only a 15% share of the investment portfolio of major international oil companies, down from 40% just over a decade ago. 

Australian Energy Producers Chief Executive Samantha McCulloch said the findings underscored the importance of competitive and stable policy settings for Australia to attract future investment in gas exploration and development.  

“The new political landscape presents opportunities for industry to work with the Government and Opposition on bipartisan and enduring policy reforms for Australia’s long-term energy security and economic growth,” Ms McCulloch said. 

“The report highlights Australia’s abundant natural gas resources and access to global markets makes it ideally placed to attract significant new investment and remain a global energy powerhouse.   

“Key to realising this opportunity and restoring investor confidence will be addressing approval uncertainty and delays, supporting critical energy infrastructure, and recognising the vital role of gas in the energy transition.” 

Wood Mackenzie also highlight the huge growth opportunity on Australia’s doorstep. Global LNG demand is forecast to rise 58 per cent by 2050, with the Asia Pacific region accounting for three quarters of total LNG demand by the middle of the century. 

But investment in Australia’s LNG capacity is only a quarter of that in the rest of the world.  Wood Mackenzie found “Whilst Australia led the mid-2010s wave of LNG projects, a subsequent emerging wave is being led by the United States and Qatar, with Australia no longer featuring significantly.” 

“Australia now trails peer nations such as the United States, Canada, Qatar, Norway and countries in South-East Asia and Africa in key investment areas including exploration and LNG capacity,” Ms McCulloch said. 

Australia will also face fierce competition for future carbon capture, utilisation and storage (CCUS) investment unless supportive policy frameworks and regulatory certainty are established. 

“Energy and climate policy must go hand-in-hand with economic policy. Without a stable policy and regulatory environment, Australia risks losing its energy edge and missing out on the next wave of global investment,” Ms McCulloch concluded.  

To read the report click here.