LNG: Challenges and lessons Learnt - Australia
Updated: Nov 27, 2020
Key Learnings From Five (Concurrent) Australian LNG Projects
It is my personal experience, that LNG capital projects require a truly global perspective, rather than just a company strategy. Oil and gas industry is committed to reduce the carbon footprint from the fossil fuels. Going in the future, LNG business has significant challenges of its own; from above the ground risks to the subsurface risk.
Lot more can be learned from Australian LNG experience, that had almost five (5) LNG projects running concurrently at one time. According to the industry sources, some of the main reasons for the high costs in Australia that resulted in cost escalations and project schedule slips (from benchmarking) were:
Absence of synergies in the projects that could have saved the high infrastructure costs
High cost of regulatory environment due to inadequate community involvement
Not having the trading flexibility to mitigate commodity price fluctuations
In adequate focus on defining the scope well for the project
Scarcity of resources in Australia, that also drove up the wages and costs.
Finally relying solely on legal framework, rather than early engagement with stakeholders & communities has given a negative political sentiment to the oil and gas industry in some regions in Australia.