Bloomberg: Australian LNG Output Cuts Seen Long Term Amid Gas Shortage

A shortage of coal-seam gas, needed to feed about $60 billion of export projects in eastern Australia, may prompt the developers to reduce shipments in the long term, according to Credit Suisse Group AG.

The liquefied natural gas developments in Queensland state face a potential shortfall of 4,500 to 9,000 petajoules over two decades, or as much as 30 percent of the supplies needed, Sydney-based analysts Mark Samter and Martin Kronborg said today in a phone interview.

While a deal to bring Arrow Energy Ltd.’s gas into the plants developed by companies including Santos Ltd. and BG Group Plc would fix the problem, getting it to the projects would be expensive, the analysts said. An oil price of at least $75 a barrel would be needed to make that viable, they said. Arrow is owned by Royal Dutch Shell Plc and PetroChina Co.

Santos is building the Gladstone LNG project that’s scheduled to begin later this year, while BG is operator of the Queensland Curtis LNG development, which started up late last year. Origin Energy Ltd. is developing a third plant on Curtis Island with ConocoPhillips that’s due to begin in 2015. MORE