Australia’s resources boom could have years to run, if the country can capitalise on the full potential of its Liquid Natural Gas (LNG) industry, according to new McKinsey & Co. research.
In a report titled “Extending the LNG boom: Improving Australian LNG productivity and competitiveness”, McKinsey & Company found investment in LNG over the last decade had surpassed $A200 billion, or more than the mining industry.
As a result, existing and currently committed LNG projects in Australia are expected to contribute A$520 billion to the economy over 2015-2025 – adding 2.6% to GDP or $A$5,700 per household – and creating 180,000 jobs.
Potential new LNG projects could add another $A320 billion to GDP over the next 12 years, adding a further 1.6% to economic growth, and creating an additional 150,000 new jobs.
However, while industry is eager to extend the resources boom through development of additional LNG projects, Australia’s high cost base threatens the financial viability of many of these possible projects.
LNG operations coming on stream in North America and East Africa have 20-30 percent lower costs than their Australian equivalents, threatening to outcompete Australian operators.
This cost gap with the competition can be closed, and the report considered a number of options to do this including:
- ? Productivity
• increasing labour and capital productivity, which have been in long-term decline, by;
• improving construction productivity through enhanced skills and practices