Harnessing Australia’s comparative energy advantage in oil & gas
APPEA 2012 Conference, Plenary paper by Professor Ian Harper
The oil and gas industry currently represents around 2.0% of Australian gross domestic product, with direct and flow-on value added of approximately $28.3 billion in 2010-11, based on total sales of $29.7 billion.
The economy-wide significance of the sector can only increase further given the current – substantial – LNG export investments mainly in Western Australia, Queensland and the Northern Territory. These represent some of the largest projects ever undertaken in Australia and collectively account for 35.4% of all current business investment. As a consequence LNG output is expected to grow by around 250% over the next seven years, with a projected value of over $35 billion in 2017-18.
This paper, produced for Australian Petroleum Production and Exploration Association’s 2012 annual conference, forms part of a wider APPEA-commissioned analysis being undertaken by Deloitte Access Economics on the economic contribution of Australia’s oil and gas industry. The study is examining the industry’s role in Australia’s economic development — both in recent years and looking forward over the medium term. A key focus of the study will be to draw out the specific economic implications of industry investment and operations and the commercial linkages with other sectors, essentially as industry activity reverberates through the broader economy.
As a complement to the empirical analysis, the study will also provide an assessment of ‘bigger picture’ economic issues of relevance to the industry, and policymakers, in order to set out those policy settings which will be necessary to fully harness the benefits of the resources boom.
The structure of this first report is as follows:
Section 1: Introduction
Section 2: The Economic contribution of Australia’s oil and gas industry
Section 3: Strategic policy issues: securing the industry’s potential
Section 4: Conclusions