by clicking the arrows at the side of the page, or by using the toolbar.
by clicking anywhere on the page.
by dragging the page around when zoomed in.
by clicking anywhere on the page when zoomed in.
web sites or send emails by clicking on hyperlinks.
Email this page to a friend
Search this issue
Index - jump to page or section
Archive - view past issues
Asian Petroleum Review : Jan-March 2011
27 Queensland, the northeastern state where the coal seam gas projects will be based, is already feeling tightness in the skilled labour market, advisory firm KPMG said in a report. A surge of retirements among the baby boomer gen- eration now nearing its mid-50s and -60s is likely to worsen the problem. "We're actually going to see a natural decline in the Australian workforce in the next 30 years or so be- cause of less people coming into the workforce, " said Jason Berry, a migration services partner with KPMG, which recommends that LNG developers recruit abroad and take extra measures to retain workers. Unless large projects are staggered, labour costs could soar up to 40 percent as firms compete for la- bour, Berry said. "If everyone wants to do the key part of the project at the same time, contractors will just pay what the mar- ket demands. It will become a merry-go-round of sal- ary increases." POLICY REFORM? Some industry watchers consider migration reform the third rail of politics but others said they saw some eas- ing of migration laws as inevitable to plug skilled la- bour gaps. "The government has to do something about letting some foreign workers in, surely. I just can't see how all these projects are going to go ahead with lack of peo- ple, " said Peter Kopetz, an analyst with Perth-based State One Stockbroking. Australian Prime Minister Julia Gillard's minority Labor party government has advocated a decrease in immigration, despite granting an exception for "enterprise migration agreements" that allow foreign workers to migrate for mega re- source projects. But the minority Labor government is unlikely to change migration policy dramatically and risk its rela- tionship with Australian unions, said one analyst. This contrasts with policy in Qatar, the world's number one exporter of LNG, which imported thousands of work- ers for projects, but still suffered a 10-month delay in the start-up of its Qatargas 4 LNG plant as contractors strug- gled to keep pace with expansion. Some LNG developers may try to skirt migration issues and slash 10 to 20 percent off labour costs by building LNG modules offshore, said John Hirjee of Deutsche Bank in Melbourne. CONSOLIDATION UNCLEAR Most Australian projects now being built or on the cards are already seen as expensive, at a cost of between $6 and $8 per million British thermal units (mmBtu), while most non-Australian projects cost less than $6 per mmBtu, the Australian Petroleum Production & Explora- tion Association says. Analysts have long speculated that BG and Santos' LNG projects and two other projects - - a joint venture between Origin Energy and ConocoPhillips and a project planned by Royal Dutch Shell - - may join forces through a joint venture or other form of consolidation to cut costs. "We are talking potentially billions of dollars, " said Geoff Barker, a partner with the resource consultancy RISC in Perth. Santos Chief Executive David Knox's estimate last year that consolidating two of the four projects could save shareholders $1 billion to $2 billion dollars is still not out of line, Parker said, and could even exceed $2 billion, de- pending on the degree of consolidation. But with BG pushing ahead with its project and Santos expected to soon follow suit, analysts said the chances for an imminent consolidation were low, though some may happen later. "It's not clear at the moment," said Di Brookman, an ana- lyst at CLSA Asia-Pacific in Sydney. "All the body lan- guage is suggesting they are all staying independent. " Even without formally consolidating, however, coopera- tion during construction, for example in building utilities, jetties, storage, and dredging could scythe down costs. (Editing by Clarence Fernandez) Thomson Reuters Asia Petroleum Review An Australia LNG ship sails off the coast of Western Australia. REUTERS/Ho New