The global energy industry is in the midst of the great energy continental shift from West to East. Leading this paradigm shift is the consuming power of China and the supply power of Australia. During the decade from 2000–2009, China spent an estimated US$115 billion on acquisitions and in 2008 alone, its investments abroad doubled from US$25 billion to US$50 billion. These acquisitions have provided the fuel that continues to push China’s economic growth forward. Based on recent forecasted economic growth in Asia Pacific and slower demand in the West, Australia is competitively positioned to become a leading regional supplier of oil, coal, iron ore and more recently, liquefied natural gas (LNG).

Australia’s LNG sector is being driven in the short-term by strong LNG demand from traditional Asian buyers such as Japan and Korean utilities, and in the medium-term by China and India as part of their rapid industrialisation programs and substitution towards cleaner fuels. If all of the 15 multi-billion dollar LNG projects in Australia come to fruition, the country may supplant Qatar as the world’s leading LNG producer by 2020; however, this is a big “if.” The sector faces several risks and challenges—notably risk of global oversupply of LNG in Asia Pacific, risk of demand saturation, a critical skills shortage and cost overruns. Those LNG projects with first move advantage—those with long-term binding supply contracts and production infrastructure already in place—are most likely to be successful in the long-term.