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by Staff Writers
Sydney (UPI) Nov 29, 2012
Australia has reported record spending in major resources and energy projects.
In its Resources and Energy Major Projects report this week, Australia's Bureau of Resources and Energy Economics said 87 major projects have committed investment of $280.2 billion.
Of those projects, 51 are for the mining of minerals, 18 for natural gas and petroleum and 18 are for infrastructure project. Mega projects, worth more than $5.2 billion, account for three-quarters of the pipeline of committed developments.
The project pipeline represents an increase of 3 percent from BREE's report in 2012.
The report also identifies 277 projects that are in the planning stage.
"To put Australia's investment in oil and gas in perspective, the total committed expenditure on these projects is comparable to the cost of the Apollo Moon Program in today's prices," Martin Ferguson, Australia's minister for Resources and Energy, said in a statement.
Ferguson noted that in the last six months to October, 10 projects worth a total of $13.8 billion have been committed. That list includes the expansion of the Australia Pacific liquefied natural gas plant under construction in Gladstone, Queensland.
The BREE report, the minister said, "shows that we have a solid pipeline of potential investment in resources and energy."
However, Ferguson acknowledged the downward spiraling of commodity prices, saying "there is no doubt that we are entering a challenging phase" and that further spending depends on controlling costs.
"In the face of lower commodity prices, the delivery of this pipeline of projects is contingent on keeping production costs down, providing access to skilled labor and increasing our productivity and efficiency," he said.
Signs that Australia's resource boom is on its last leg -- sparked by mining giant BHP Billiton's decision in August to shelve its multibillion-dollar Olympic Dam project in South Australia -- are still worrying investors, who canceled 18 projects in preliminary stages of development in the six months to October.
"The decrease in the number of projects is attributable to the removal of projects that have not progressed as scheduled and because information could not be sourced that confirmed a clear intention to progress to development," the bureau said in its report.
Separately, Queensland Resources Council Chief Executive Officer Michael Roche, in an address to the industry body's annual lunch Thursday said the challenge is to ensure that there is a strong pipeline of projects across all commodities to sustain and grow the resources sector.
"Achieving that strong pipeline of new projects will require a clear focus on addressing cost disadvantages such as workforce inflexibility, ballooning tax and royalty imposts and regulatory green tape and red tape," Roche said.
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