There was a distinct buzz surrounding the 22nd South East Asia Australia Offshore and Onshore Conference gathering this September. It wasn’t surprising given that 750 industry executives gathered in Darwin as a newly elected Northern Territory Government were two weeks into taking the reins. Those that attended and made the journey to Darwin were rewarded with the first opportunity for the onshore and offshore oil and gas sector to engage with the Territory’s new Chief Minister, the Hon Michael Gunner and his very recently elected cabinet.
Read on for a few of the key themes that shaped the 2016 event:
The Northern Territory’s moratorium on hydraulic fracturing is a matter of fact. Addressing the conference “Mr Gunner said a panel of experts would investigate fracking in the NT and would decide how long the moratorium would last and if it would result in a permanent ban”. The announcement was met with mixed feelings from those attending and speaking at the conference, so only time will tell what the long-term outcome will be and what this will mean for the industry.
Turning to trends in the global LNG market, there was no escaping the dose of reality that is ‘in the near term the industry is operating in a time of oversupply’. Global industry guru Dr. Fereidun Fesharaki told attendees that “too much LNG is chasing too few buyers” and that new Long term Contracts and Spot LNG prices in Asia remain disconnected, with Fesharaki predicting a price recovery post 2018.
Looking to a brighter long term future Bernstein’s Dr. Neil Beveridge sentiment was that “It’s a buyers’ market now. But not forever…” this was backed up by charts that showed growing LNG demand and a lack of new project approvals will help balance the market over time.
Day two morning presentations focused on the role that the Northern Territory’s gas could play in meeting future east coast demand. “A triple whammy of events has created an increasingly complex environment for many gas market participants” observed Mr. Rod Sims, Chairman of the ACCC during his opening keynote address “However, for the Northern Territory to realise its potential in the east coast gas market it is imperative we have some onshore gas development. We also need to avoid pipeline charges making the cost of transporting the gas to the east coast prohibitive,” Mr Sims said.
Despite sobering commentary from the opening day’s analysts there was a distinctly upbeat mood present across the week’s activities. Many discussions showed that the industry is clearly rolling up its sleeves and getting on with the job of embracing these new market conditions, this was evident in a speaker line-up that spoke to topics such as collaborating for mutual success and lessons learned from other ‘lean’ industries.
Practical insights were shared in a supply chain and collaboration panel discussion that brought together senior representatives from ConocoPhillips, Monadelphous and MMC Australia. The conversation was steered by Mark Borowski of Deloitte Australia and offered the voices of an operator, a tier one contractor and a local contractor. “You need to think outside of the box. Come to me with something that distinguishes you from your competitor” was Leon Smidt’s of ConocoPhillips advice to local contractors, while Owen Pike of MMC Australia gave practical examples of how his NT based business had successfully adopted new mechanisms to estimate jobs at a rate that was required for MMC Australia to succeed in doing business competitively.
If SEAAOC 2015 was about acknowledging that change was in the air, 2016 was certainly about ‘what are we (the industry) doing about it?”.
We look forward to meeting to discuss how industry dynamics and opportunities have developed when we next meet in Darwin in August 2017. We hope to see you there.
For all the available SEAAOC 2016 conference papers, please click here.