Chevron Corporation (CVX), Royal Dutch Shell plc (ADR) (RDS.A): A Major Threat to Australian LNG Ventures

And even though there remains great uncertainty over the “timing and volume” of U.S. Cheniere Energy, Inc. (NYSEMKT:LNG) exports, Wood Mackenzie nevertheless forecasts that the U.S. and Canada will account for half of the world’s potential new LNG capacity by 2025.

The bottom line
Going forward, Australian LNG operators have their work cut out for them. In addition to bringing down operating costs, reaching final investment decision dates for key projects will be crucial if they are to become competitive against similar ventures in the U.S. and other key LNG regions, such as Canada, East Africa, and Russia.

East African ventures, many of them expected to come on line in 2016, may pose an especially severe threat. Not only are operating costs significantly lower in East Africa — with labor costs, in some instances, less than half of what they are in Australia — but the region is also bolstered by its ideal geographical location, allowing it to potentially supply both Asian and Atlantic markets.

With major gas-producing regions vying for profits in the growing global LNG trade, Australia will need to find ways to become competitive or risk having the energy industry’s capital flee from its borders.

The article A Major Threat to Australian LNG Ventures originally appeared on Fool.com and is written by Arjun Sreekumar.

Fool contributor Arjun Sreekumar has no position in any stocks mentioned. The Motley Fool recommends Chevron.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.