The costs of building LNG plants in Australia rises by the month.
What's going on?
For their part gas industry executives finger phantoms: poor productivity, government regulation, stroppy greenies etc. etc.
By making life hard for LNG, they say, the costs of LNG projects in Australia are rising, they say.
A better answer, however, is this: LNG is a bad, uneconomic deal for Australia. Pipeline gas exports to Asia would be cheaper. That's what prices are saying.
Roughly $160 billion of LNG plants are now planned for Australia. That's roughly 16% of GDP. By the time you read this, prices probably will have risen again.
The goal of all this LNG infrastructure will be to export roughly 55 billion cubic meters per year of Australian natural gas to China, Japan and South Korea.
Here at Grenatec, we estimate a natural gas pipeline of equivalent capacity could be built between Australia and North Asia for between $125-200 billion -- depending on topology.
We reach our figures by analysing prices of comparable natural gas pipelines elsewhere. These include Langeled in the North Sea, Nordstream in the Baltic Sea and the proposed Trans-ASEAN Gas Pipeline in Southeast Asia.
These show isn't Australia isn't some idiosyncratically high-priced economy. Australia's productivity, regulation and greenies are no different than elsewhere.
What's different is that Australia's gas industry is ignoring what prices are now trumpeting: LNG is a bad long-term economic deal.
There's two reasons for this.
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