Australian LNG: cost deflation offsets low prices

Medium term outlook remains positive for country's LNG market

Australia’s fortunes have long rested on its ability to exploit and export its vast mining and minerals base. Prolonged demand for fossil fuels and other commodities from Asia-Pacific, particularly China, has provided decades of prosperity and shielded the country from the fiscal hardships experienced in other developed nations. But while it is on track to overtake Qatar as the world’s largest exporter of LNG, Australia is now facing a series of challenges to maintain growth as depressed commodity prices and slumping demand for its high-priced gas from buyers in Asia-Pacific put pressure on investment. In response to the slowdown, private sector enterprises have slashed expenditure on upstre