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In the lead up to the 22nd South East Asia Australia Offshore & Onshore Conference, we spoke with the Australian Petroleum Production & Exploration Association’s Chief Executive Officer, Malcolm Roberts, to delve into his views on the current challenges and opportunities for Australia’s oil and gas sector, learn more about APPEA’s campaign promoting the benefits of the Northern Territory’s emerging unconventional gas sector and find out why he believes Australia’s real resources boom is just beginning.
The global oil and gas industry has been operating in a new low price era for some time, how can Australia’s oil and gas sector best position itself for success in the current market?
MR: It’s all about reducing costs and boosting our competitiveness. The demand is there – the International Energy Agency is forecasting average annual growth in the regional LNG market of two per cent for the rest of the decade. By 2030, the world gas market is predicted to be 30 percent larger. Australia is well placed to meet that demand. Our challenge is to remain competitive in the face of new competitors and oversupply. Australia is still a very high cost destination for investment. The industry is rising to the challenge but it’s a painful process. And there’s clearly a big role for government. Our political and regulatory cultures must change. Productivity must be at the core of our national agenda.
Australia’s natural gas industry has experienced a large period of project investment and as construction phases draw to an end, what are the opportunities that APPEA anticipates for the operation and maintenance of these assets?
MR: In some respects, the real boom is just beginning. The construction phase may be winding down but the operations phase will last for decades. The benefits in terms of jobs, revenues to governments and export income will be felt for generations. There’s a huge opportunity for Australia in servicing these projects. It’s one thing to be the largest exporter of LNG, but we should be aiming to also be a world-class exporter of equipment, technology and services. In 2014, the LNG services sector was worth $29 billion. McKinsey and Co have estimated that developing a local services sector could generate up to 15,000 additional jobs and generate up to $1 billion in service exports. How do we make it happen? Collaboration is essential and that’s something, fortunately, we are doing more and more. A well-regulated industry is crucial for industry success and safe operation, in ’s APPEAview what are the critical requirements for ensuring successful regulation of the industry?
MR: Regulation must address a genuine need such as health, safety and environmental concerns. Regulation has to be proportionate to the problem and it must be cost-effective. All industries, not just ours, struggle with regulatory regimes distorted by politics. Moratoriums and blanket bans are a case in point. Less tangibly, there is another critical factor for a successful regulatory regime – trust. It’s vital that regulators earn and maintain the trust of their stakeholders. The public must be confident that regulation is appropriate and effective. APPEA recently launched a campaign promoting the benefits of the Northern Territory’s emerging unconventional gas sector – can you share more on the aims and objectives of this initiative?
MR: People in the Territory are being bombarded with misinformation at a time when they just want the facts. They want to know the truth. Fly-in, fly-out activists aim to create fear and confusion because they can’t sustain their claims with evidence. For our part, the industry welcomes scrutiny and an honest debate because we know we are using safe, proven technologies. Every reputable, independent inquiry has found that, properly regulated, the industry is safe. We think it is important that people have access to the facts and can form their own opinions. Our campaign in the Territory highlights local people – pastoralists, indigenous business people – who have direct experience of the industry and can speak honestly about it. Our industry has a great story to tell.
You will speaking at the 22nd SEAAOC this September, what are the conversations you are most looking forward to having with your peers at the event?
MR: SEAAOC is a fixture in my calendar. The conference is the best opportunity to hear directly about the wealth of projects – onshore and offshore – in the north. The Territory has prospered in large part because of the investment in developing our offshore resources. There is much more to come. At the same time, we have tremendous potential to develop one of the world’s great shale gas resources. The NEGI offers the Territory a new market and an expanded role in Australia’s largest domestic gas market. Clearly, there are challenges but it is an exciting time and I am looking forward to being part of it.
Dr. Malcolm Roberts is the Chief Executive Officer of Australian Petroleum Production & Exploration Association. Before joining APPEA in June 2015, he was Chairman of the Queensland Competition Authority and has considerable experience in industry associations, having held leadership roles with the Energy Networks Association, The National Generators’ Forum, the Australian National Retailers Association and the Housing Industry Association.