Investment-Opportunities-in-Australian-Resources-and-Energy.pdf

Investment opportunities in Australian resources and energy

| Investment opportunities in Australian resources and energy

DisclaimerThis report has been prepared as a general overview. It is not intended to provide exhaustive coverage of the topic. The information is made available on the understanding that the Australian Trade Commission (Austrade) and the Australian Government are not providing professional advice.While all care has been taken in the preparation of this report, the parties do not accept any responsibility for any losses suffered by persons relying on information contained in this report or arising from any error or omission in the report. Any reference to companies or investment activities is for illustrative purposes only and does not constitute an endorsement of those companies or any investment activity.Copyright The Australian Trade Commission (Austrade) June 2014.This report is subject to copyright. All or part of it can be reproduced for bona fide research or public policy with appropriate acknowledgement of the Australian Trade Commission. Requests and inquiries concerning reproduction should be addressed to Austrade, GPO Box 5301, Sydney NSW 2001 or email [email protected].

ContentsWHY AUSTRALIA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

A WORLD LEADER IN RESOURCES AND ENERGY . . . . . . . . . . . . . . . . . . . . . . . . .4

OPPORTUNITIES IN EXPLORATION AND DEVELOPMENT . . . . . . . . . . . . . . . . . 6

OPPORTUNITIES IN OPERATIONS AND MAINTENANCE . . . . . . . . . . . . . . . . . 10

OPPORTUNITIES IN ENERGY EFFICIENCY AND RENEWABLES . . . . . . . . . . . . 16

A GATEWAY TO ASIA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

AN INNOVATIVE LOCATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20

A SUPPORTIVE REGULATORY ENVIRONMENT . . . . . . . . . . . . . . . . . . . . . . . . . 22

KEY INDUSTRY AND GOVERNMENT AGENCIES . . . . . . . . . . . . . . . . . . . . . . . . . .23

HOW AUSTRADE CAN HELP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25

Australia. Abundant. Innovative. Sustainable.

Australias vast mineral and petroleum reserves underpin its status as a global leader in the resources and energy sector.

Australia is home to an innovative mining equipment, technology and services sector and hosts some of the worlds leading mining, oil and gas conglomerates, offering investors excellent collaboration prospects and access to global supply chains.

Significant exploration opportunities in oil, gas and minerals, and a healthy pipeline of committed projects have generated a high level of demand for operations and maintenance solutions. Rising power prices and a commitment to a less carbon-intensive economy mean there is also a demand for renewables and energy efficient technologies.

These factors, combined with Australias proximity to the energy-hungry markets of Asia, rich intellectual capital and a supportive government, make the country an attractive destination for investors and new market entrants seeking sustainable, long-term returns.

AAA

12TH LARGEST ECONOMY IN THE WORLD

4TH LARGEST ECONOMY IN ASIA REGION

GDP: US$1.5 TRILLION

AAA CREDIT RATING*

*Standard & Poors, Moodys and Fitch

Investment opportunities in Australian resources and energy | 3

Why Australia

Strong economyAustralia is well into its 23rd consecutive year of economic growth. This growth is expected to continue with the International Monetary Fund anticipating Australia will achieve average annual real GDP growth of 2.8 per cent between 2013 and 2019 the highest forecast among major advanced economies.

The resources sector is Australias largest single export earner, accounting for around 60 per cent of total goods and services exported. Export earnings are projected to increase at an average rate of 8 per cent a year from 201314 to total A$284 billion in 201819.1

Abundant resourcesAustralias rich mineral and petroleum deposits and comprehensive geoscience data provide investors with compelling exploration, operations and maintenance opportunities. A substantial pipeline of new and planned projects with 25- to 50-year life cycles offers sustainable investments in mining, oil, and conventional and unconventional gas production. Australia also has significant and underdeveloped renewable energy resources and a rapidly growing off-grid market. See pages 6 to 17 for more details.

Supportive governmentThe Australian, state and territory governments are committed to supporting the resources and energy sector, developing a policy and regulatory framework that facilitates increased international investment and participation in mining, oil and gas projects. There are also exploration incentives and research and development (R&D) tax concessions for eligible companies. See page 22 for more details.

Global networkMost of the worlds largest mining and oil and gas companies and their global suppliers have longstanding operations in Australia. Investors can seek collaborations with these organisations or link into substantial supply networks across a range of resources and energy sub-sectors. There is also strong demand for maintenance and operations firms that can improve productivity and cost competitiveness within the sector.

World-class R&DAustralia is known for developing innovative products and services for the resources and energy sector. Investors can collaborate and share in research outcomes with world-class institutions, including the national science agency, the Commonwealth Scientific and Industrial Research Organisation (CSIRO), Cooperative Research Centres, Centres of Excellence and universities. See page 20 for more details.

Strategic locationAustralias proximity to high-growth Asian markets makes it an excellent base from which to export commodities, services and technologies. Mature export links, free trade agreements and a strong logistics and shipping network help exporters from Australia access these crucial markets. See page 18 for more details.

1. Bureau of Resources and Energy Economics, Resources and Energy Quarterly Report, March 2014.

Australia offers investors access to a growing and resilient economy, close trade and cultural links to the Asia-Pacific region and a transparent regulatory environment.

4 | Investment opportunities in Australian resources and energy

2. Bureau of Resources and Energy Economics, Resources and Energy Statistics 2013 www.bree.gov.au/sites/default/files/files//publications/res/annual_res_2013.pdf.3. Bureau of Resources and Energy Economics, Resources and Energy Major Projects, April 2014 www.bree.gov.au/sites/default/files/files//publications/remp/remp-2014-04.pdf.

A world leader in resources and energy

The resources and energy sector has underpinned Australias economic growth for more than a decade. The countrys resource industries are based on world-class expertise and technology in exploration, development, production, processing and environmental management.

Facts and figures In 201213, the resources and energy industry:2, 3

accounted for around 10 per cent of Australias GDP earned A$175.9 billion in export income, representing 58.5 per cent of Australias total export income employed 266,000 people or 2.3 per cent of the national workforce generated A$12.7 billion in new private capital expenditure, up 15.5 per cent on 201112 invested A$7.1 billion in minerals and petroleum exploration.

*As at December 2012. Source: Geoscience Australia, Australias Mineral Resource Assessment 2013.

Australias commodity world rankings*Australia is ranked in the worlds top five for the availability and output of the following resources.

Commodity Resources World ranking Production World ranking

Iron ore 44,650 Mt 1 520 Mt 1

Uranium 1,174 kt 1 7.009 kt 3

Coal (black) 61,082 Mt 5 501 Mt 4

Gold 9,909 t 1 251 t 2

Zinc 64.1 Mt 1 1.54 Mt 2

Nickel 17.7 Mt 1 0.244 Mt 4

Copper 91.1 Mt 2 0.91 Mt 5

Bauxite 6,281 Mt 2 76.3 Mt 1


Commonwealth of Australia (Geoscience Australia) 2014.

FIGURE 1: LOCATION OF MAJOR RESOURCES

FIGURE 2: MAJOR PROJECTS AT COMMITTED STAGE

Source: Bureau of Resources and Energy Economics, Resources and Energy Major Projects, April 2014.

WA

NT

QLD

SYDNEY

SA

NSW

TAS

VIC

BONAPARTE BASIN

BROWSEBASIN

CARNARVONBASIN

CANNING BASIN

COLLIEBASIN

EUCLABASIN

ARCKARINGABASIN

LEIGHCREEK

POLDA BASIN

ST VINCENT BASIN

OTWAYBASIN

TASMANIA BASIN

GIPPSLAND BASIN

OAKLANDS BASIN

MURRAYBASIN

GLOUCESTERBASIN

SYDNEY BASIN

CLARENCEMORETON

BASIN

IPSWICHBASIN

SURATBASIN

GALILEEBASIN

GUNNEDAHBASIN

BOWENBASIN

CALLIDE BASIN

TARONGBASIN

PERTHBASIN

MELBOURNE

BRISBANE

COOPERBASIN

MULGILDIE BASIN

PERTH

DARWIN

HOBART

ADELAIDECANBERRA, ACT

0 750 km

AERA 1.2

150140130120

10

20

30

40

50

Black CoalBrown CoalCoal Seam GasConventional GasUraniumOil (crude, condensate, LPG)

Resource typeTidal energy (total annual tidekinetic energy 1 GJ/m2 )Wave energy (total annualwave energy 0.5 TJ/m)Wind energy (average windspeed >7 m/s)

Solar energy (>14 MJ/m2per day)

Geothermal energy (>3 km of sedimentand/or hotter than 200oC at 5 km)

Major energy basin

Demonstrated resources (PJ)

50 000100 000

100 000250 000

10 00025 000

25 00050 000

250 000500 000

>500 000

150010 000

Australia had 48 major projects at the committed stage with a value of A$229 billion (as at April 2014). Of these, there were 14 energy projects worth an estimated A$197 billion; 25 mineral, mining and processing projects worth an estimated A$22.3 billion; and nine infrastructure projects worth an estimated A$9.5 billion.

LEGEND

gas pipeline$099m$100499m$500999m$1 000m+

project committed value

rail line

Adelaide

capital city

Adelaide

Perth

HobartHobart

Brisbane

Canberra

Darwin

Melbourne

Sydney

Burrup ammonium nitrate

Ichthys LNG

Gorgon LNGSpar gas

Mine of the future expansion iron ore

Greater Western Flank oil & gasWheatstone LNG

Balnaves oilGrosvenor underground coal

Middlemount (stage 2) coal

Metropolitan longwall coalNRE No.1 Colliery coal

Gladstone LNGWiggins Island coal terminal

Hunter Valley Corridor Capacity Strategy (Contracted)coal infrastructure

Wiggins Island rail project

Queensland Curtis Island Project LNGAustralia Pacific LNG

Hay Point (phase 3) coal infrastructure

WAIO optimisation iron ore infrastructure Horizon 1 iron ore

Iron Valley iron ore

Rocklands copper

Roy Hill iron ore

Moomba to Sydney gas pipeline

Goonyella System Expansion coal infrastructure

Keysbrook zircon

Coniston oil

Baralba expansion coal

Eagle Downs coal

Boggabri opencut coal

Appin Area 9 coal

Port Pirie redevelopment

Dugald River zincLady Lorettaexpansion zinc

Longford Conditioning Plant gas

Port of Townsville upgrade Berth 8copper infrastructureCharters Towersgold

Woodlawn Retreatment

zinc - copper

Hera gold

McArthur River (phase 3)lead, zinc & silver

Ashton South East coal

Maules Creek coal

Xena gas Julimar gas

Mt Webber iron ore

Iron Bridge iron ore

WAIO Nelson Point expansion iron ore infrastructure


Opportunities in exploration and development

Vast deposits awaiting discoveryDespite high levels of production, Australias Economic Demonstrated Resources (EDR) deposits for major mineral commodities have risen through discoveries at new and known sites over the past three decades. These resources can sustain current levels of mine production for many years to come.

But there is more to be found. The Australian continent remains effectively underexplored, particularly at depths of greater than 100 metres. Since 1990, 12 new world-class mineral deposits have been discovered and in 2013, several companies announced the discovery of maiden resources at their existing sites.4

Comprehensive geoscience dataAustralias governments have developed major geoscience programs to provide explorers with pre-competitive information and datasets on brownfield and greenfield mineral provinces.

Geophysical information, including regional gravity, deep seismic and high-resolution airborne magnetic data, is supplemented with geological maps, databases of geochemical and mineral occurrences and deposits, geographic information system (GIS) datasets, reports and interpretative products.

Geoscience Australia provides an entry point to fundamental geoscience data and information. The site allows investors and explorers to access geoscience information at a national level and refines searches down to the regional and local level via pathways to the relevant state and territory datasets.

Visit www.geoscience.gov.au for more information.

Australia is an enticing destination for resource exploration. The country has vast deposits of minerals and primary energy resources in proven, underexplored or unexplored sites. To facilitate exploration, Australias governments (at national, state and territory levels) provide comprehensive geoscience data to help investors make informed decisions.

Multiple development-ready projectsThere is a substantial pipeline of 224 major projects at the publicly announced and feasible stages in Australia, providing a broad range of new investment and partnership opportunities for international firms.5

As at April 2014, there were 78 major projects at the publicly announced stage of the investment pipeline with a combined value of between A$96 billion and A$122 billion. This pipeline includes 13 iron ore projects worth between A$19.6 billion and A$29.8 billion, 13 coal projects with a combined value of between A$14.9 billion and A$16.7 billion, and eight oil, gas and LNG projects worth between A$28.5 billion and A$30.5 billion.

In addition, there are 146 projects at the feasibility stage of the investment pipeline, with a combined value of A$169 billion. These include 47 coal projects with a combined value of A$51 billion, 20 iron ore projects (A$29 billion), and eight oil, gas and LNG projects (A$43 billion).

4. Geoscience Australia, www.ga.gov.au/products-services/publications/australias-mineral-resource-assessment/mineral-exploration.5. Bureau of Resources and Energy Economics, Resources and Energy Major Projects, April 2014, www.bree.gov.au/sites/default/files/files//publications/remp/remp-2014-04.pdf.

OFFSHORE PETROLEUM EXPLORATION ACREAGE RELEASEIn Australia, offshore petroleum exploration and development is regulated by a title system. Petroleum activities can occur only if a company holds a valid title, which provides holders with an exclusive right to apply for further approvals to conduct safe petroleum operations in the area.

The issuing of new exploration permits is facilitated through the Offshore Petroleum Exploration Acreage Release. Every year, the Australian Government releases a number of vacant offshore petroleum areas for which companies can bid for exploration permits (usually within a six- or 12-month timeframe).

The 2014 Acreage Release comprises 30 areas located across four basins in the offshore areas of the Northern Territory, the Territory of Ashmore and Cartier Islands in the Indian Ocean off the northwest coast of Australia, and Western Australia. Twenty-six areas are available for work program bidding and four areas for cash bidding. All release areas are supported by pre-competitive geological and geophysical data and analysis.

Visit www.petroleum-acreage.gov.au for more information.


Unconventional gasAustralia has some of the worlds largest reserves of proven and probable unconventional gas. These include coal seam gas (CSG), shale gas and tight gas reserves.

Abundant resources

Australias CSG resources were estimated to have an EDR of 35,905 PJ (33 Tcf), with an additional 65,529 PJ (60 Tcf) of sub-economic demonstrated resources and very large inferred CSG resources. EDR reserve life is estimated to be around 150 years at current rates of production.6

Queensland accounts for 95 per cent of CSG reserves, and has three CSG to LNG projects under construction with a total value of A$63 billion. These will be the first projects to use unconventional gas as their primary feedstock in Australia.

Shale gas production in Australia is an emerging industry. The US Energy Information Administration7 estimates there is 396 Tcf of technically recoverable shale gas resources in Australia, which represents nearly 400 years of the countrys current annual domestic gas usage.8

The agency identified the Canning Basin in Western Australia as the area with the largest shale gas resources in the country, estimated to contain 229 Tcf.

6. Geoscience Australia, www.australianminesatlas.gov.au/education/fact_sheets/coal_seam_gas.html#resources.7. US Energy Information Administration, www.eia.gov/analysis/studies/worldshalegas.8. CSIRO, www.csiro.au.9. Department of Manufacturing, Innovation, Trade, Resources and Energy, 2012, Roadmap for unconventional gas projects in South Australia.

Favourable project economics

In most cases, Australias unconventional gas reserves are conveniently located close to existing and planned infrastructure, reducing development costs and financial risk.

The first commercially prospective unconventional gas basin is the Cooper Basin on the border of South Australia and Queensland, a region with existing infrastructure that has been supplying gas to south-eastern Australia for more than 40 years. Over 5,000 kilometres of pipelines have been laid from the Cooper Basin to gas markets in eastern and southern state capitals and to the liquids load-out facility at Port Bonython, South Australia.9

The CSG to LNG projects in Queensland involve the construction of three of the largest gas transmission lines in Australia (between 420 and 530 kilometres long). Each pipeline will link production wells in the Surat Basin to the LNG plants located on Curtis Island near Gladstone.

These ventures demonstrate how a critical mass of projects and infrastructure can allow gas producers to manage commercial and operational risk by investing in shared transmission infrastructure and capacity to connect their production facilities.


Opportunities in operations and maintenance

Commonwealth of Australia (Geoscience Australia) 2014.12

FIGURE 3: AUSTRALIAS GAS RESOURCES

Australias substantial pipeline of brownfield and greenfield oil and gas projects offers a wealth of long-term supply chain opportunities for operations and maintenance companies. Participants can choose from a wide range of petroleum and conventional and unconventional gas projects across the country. There is also high demand for innovative mining equipment, technology and services across all resources sub-sectors.

Oil and gasThe oil and gas sector is a major component of Australias economy, contributing A$26.9 billion to the countrys merchandise exports in 2013.10 As at April 2014, there were 30 major oil, gas and LNG projects, including 14 at the committed stage worth a combined A$197 billion.11

WA

NT

SA

QLD

NSW

VIC

TASBASS BASIN

Gas produced: 98Gas remaining: 736

OTWAY BASINGas produced: 850

Gas remaining: 1292

ADAVALE BASINGas produced: 9

Gas remaining: 26

CANNING BASINGas produced: 0

Gas remaining: 372

CLARENCEMORETON BASIN

Gas remaining: 100CSG remaining: 428

GUNNEDAH BASINGas produced: 2

Gas remaining: 12CSG remaining: 1520

GLOUCESTERBASIN

CSG produced: 0CSG remaining: 669

SURAT BASINGas produced: 290Gas remaining: 14

CSG produced: 309CSG remaining: 24 671

SYDNEY BASINCSG produced: 30

CSG remaining: 287

BOWEN BASINGas produced: 721Gas remaining: 389CSG produced: 693

CSG remaining: 8330

AMADEUS BASINGas produced: 439Gas remaining: 311

BONAPARTE BASINGas produced: 1214

Gas remaining: 24 005

BROWSE BASINGas produced: 0

Gas remaining: 37 815

CARNARVON BASINGas produced: 18 315Gas remaining: 95 914

COOPER/EROMANGA/WARBURTON

BASINSGas produced: 6926Gas remaining: 1693

PERTH BASINGas produced: 725Gas remaining: 267

GIPPSLAND BASINGas produced: 9120Gas remaining: 9253

PERTH

SYDNEY

DARWIN

HOBART

ADELAIDE

BRISBANE

CANBERRA, ACT

MELBOURNE

AERA 4.1

0 750 km

150140130120

10

20

30

40

LNG processing plant (operating)LNG processing plant (committed)

Gas resourcesConventional gasresources (PJ)Coal seam gasresources (PJ)

Past production (PJ)

Gas pipeline (proposed)Gas pipeline

Gas basin

10. Australian Bureau of Statistics, Cat. No. 5368.0 International Trade in Goods and Services, Australia, Table 32a. Merchandise Exports, Industry.11. Bureau of Resources and Energy Economics, Resources and Energy Major Projects, April 2014 www.bree.gov.au/sites/default/files/files//publications/remp/remp-2014-04.pdf.12. Carson, L., 2014. Australian Energy Resource Assessment Second Edition. 2 ed. Report. Geoscience Australia, Canberra.


Large pipeline of projects

A strong pipeline of new and planned conventional oil and gas projects offers long-lasting opportunities for international investors. Based on projects that are committed or considered highly likely to proceed, the Australian oil and gas industrys total operational expenditure in the years to 2035 is estimated to be A$411.5 billion.13

LNG production in particular is set to rise over the next four years. Australia was the worlds third largest LNG exporter in 201214, and is expected to become the second largest by around 2016 and the largest by the end of the decade.15

Seven new LNG projects are currently under construction in Australia, amounting to A$190 billion of capital expenditure and 61.8 million tonnes of potential new capacity.16 It is estimated this would represent almost a quarter of current global capacity and 60 per cent of new global capacity.

FIGURE 4: AUSTRALIAS LNG PROJECTS

Start Project under construction Company Value (A$b) Capacity (Mt)

2014 Queensland Curtis LNG (QLD) QGC (BG Group), CNOOC, Tokyo Gas 20 8.5

2015 Gorgon LNG (WA) Chevron, Shell, ExxonMobil 52 15.6

2015 Gladstone LNG (QLD) Santos, Total, Petronas, KOGAS 18 7.8

2015 Australia Pacific LNG (QLD) Origin Energy, ConocoPhillips, Sinopec 25 9

2016 Wheatstone (WA) Chevron, Apache, Kuwait Foreign Petroleum Exploration Company

29 8.9

2017 Prelude (WA) Shell, INPEX, KOGAS, CPC 13 3.6

2017 Ichthys (NT) INPEX, Total 33 8.4

TOTAL 190 61.8

Source: Bureau of Resources and Energy Economics, Gas Market Report, 2013

13. Deloitte Access Economics, 2012, Advancing Australia Harnessing our comparative energy advantage Supplementary Analysis Australian Petroleum Production and Exploration Association Limited. www.appea.com.au/wp-content/uploads/2013/04/DAE-supplementary-analysis-report-november2012.pdf.

14. US Energy Information Administration, 2013, www.eia.gov/countries/cab.cfm?fips=AS.15. Bureau of Resources and Energy Economics, 2012, Australian Exports and Infrastructure Outlook to 2025.16. Paul Johnson, Energy Supplier Advocate, Presentation to Australian Petroleum Production & Exploration Association (APPEA) Conference 2013.

THEY CHOSE AUSTRALIA:

SHELLS PRELUDE FLNGLonger than four soccer fields and displacing six times as much water as the largest aircraft carrier, Shells Prelude Floating Liquefied National Gas (FLNG) facility will be the biggest floating production facility in the world.

When completed, the facility will be 488 metres long and 74 metres wide, and when fully loaded will weigh around 600,000 tonnes. It will be towed to its location in the Browse Basin, off the northwest coast of Western Australia, to extract and process gas from the Prelude and Concerto gas fields. Onshore support services for the facility will be spread between Broome, Darwin and Perth, and Perth will be established as a centre for operational excellence in FLNG.

The Prelude FLNG facility is expected to stay moored at location for 25 years, and to produce at least 3.6 million tonnes of LNG per year as well as liquid petroleum gas and condensate for export.


Tap into global supply chains and expertise

The large concentration of multinational oil and gas companies with expanding operations in Australia provides investors and international firms with significant opportunities to enter their existing supply chains. Many are undertaking projects that will require operational support and maintenance services. Firms offering innovative technologies which can help increase the productivity and efficiency of new and existing projects will be in high demand across the Australian oil and gas sector.

In LNG in Queensland alone, new entrants can participate in:

Upstream activities: An estimated 350 to 500 new wells per annum need to be drilled, presenting opportunities for drill rig service companies

Midstream activities: Up to four underground, high-pressure gas transmission pipelines are needed to link gas fields, creating maintenance opportunities

Downstream activities: The establishment of six LNG trains by 2016 will mean that each liquefaction facility requires substantial services during the construction period and over its operational lifetime.

The critical mass of participants within the oil and gas sector reduces risk for new entrants, who can spread their activities across different customers, geographies, sub-sectors and projects. Newcomers can further reduce risk and costs by entering the Australian market through partnerships and joint ventures with local supply chain companies through:

Project Connect: An online service that lists project opportunities and connects Australian businesses with industry suppliers

Achilles Supply Base: A vendor pre-qualification and supplier management system for the oil and gas sector

Industry Capability Network: An independent networking organisation that connects local suppliers and service providers to meet the requirements of local projects

Industry Technology Facilitator: A not-for-profit organisation comprising members of the oil and gas industry that focuses on identifying technology needs, fostering innovation and facilitating the development and implementation of new technologies.

Investors can also learn from the experience of global players operating in Australia, who bring knowledge of contemporary extraction methods developed here and in other leading oil, conventional and unconventional gas jurisdictions such as Canada, the United States, the UK and Europe.

Global companies with oil and gas operations in Australia include Chevron, ConocoPhillips, ExxonMobil, PetroChina and Shell. Engineering, procurement and construction management firms such as Bechtel, Halliburton, Mitsubishi, Schlumberger and Technip also have businesses in Australia.

Innovative R&D

Investors can participate in R&D activities with Australias world-class research institutions, universities and Centres of Excellence. For example, Australia is home to:

Chevrons second Global Technology Centre (see case study on page 21), IBMs fifth oil and gas research centre, and Shells first floating LNG training and research facility

CSIRO (see page 20), which is developing new technologies for oil and gas exploration and production, with a focus on petroleum systems, oil recovery, flow assurance and unconventional gas

Queensland University of Technologys Institute for Sustainable Resources, which has partnered with Schlumberger to establish a geotechnical laboratory

University of Queenslands Centre for Coal Seam Gas, which undertakes research in water; geophysics and geochemistry of CSG; petroleum engineering; and social performance and community impact

the Australian Resources Research Centre the Western Australian Energy Research Alliance the Energy and Minerals Institute at the University of

Western Australia.

Refer to An innovative location on page 20 for more details on Australias R&D capabilities.

Based on projects that are committed or considered highly likely to proceed, the Australian oil and gas industrys total operational expenditure in the years to 2035 is estimated to be A$411.5 billion.13



ADAMS VALVESGerman valve-maker Adams Armaturen selected Australia as the location of its first Asia-Pacific facility. The company won two major LNG projects in Queensland, which will provide Adams with an installed base of more than 3,000 valves in Australia.

Adams said the terms and conditions of its LNG contracts as well as the desire to provide fast service and short delivery times led it to set up in Australia. It opened its service centre near Sydneys Kingsford Smith Airport, providing smooth access to road and air transport, and proximity to several major logistics companies. The company plans to build a spare parts warehouse for critical components, and begin manufacturing an exclusive Made in Australia product line.17


ENERSIGHT CORPORATIONIn 2013, Canadian oil and gas software provider Enersight Corporation (www.enersight.com) opened an office in Brisbane, its first outside North America. The Canadian company decided to expand to Australia after attracting a second Australian client that converts CSG to LNG. The company said adding a second CSG-to-LNG client made it the dominant player in Australias unconventional field development planning market.

In addition to its large coal seam gas projects, Australia has a burgeoning unconventional industry for shale gas and oil, said Don Merritt, Vice President for Enersight Australia. Being the dominant player in the North American shale gas planning market, we are very excited by the potential for growth for Enersight in Australia.18

17. www.austrade.gov.au/Invest/Investor-Updates/2013/1113-Adams-Valves-chooses-Australia-for-Asia-Pacific-expansion.18. www.austrade.gov.au/Invest/Investor-Updates/2013/0815/Canada-s-Enersight-expands-to-Australia.



MINESENSE TECHNOLOGIESCanadian company MineSense Technologies provides products and services that improve the ore recovery process. Its proprietary ground-penetrating sensor technology integrates with material-handling equipment to measure and report the grade of the ore.

In December 2012, MineSense established a subsidiary in Brisbane, Queensland. The citys strategic location across three international time zones, proximity to many of Australias largest resource and mineral deposits including coal, base metals, coal seam gas and petroleum and highly skilled workforce, make it an ideal location for the companys business.

MineSense is also a member of the Australian Cooperative Research Centre for Optimising Resource Extraction (CRC ORE). MineSenses technological capabilities combine with CRC OREs innovative early waste removal approaches to provide ore upgrading opportunities to customers.19

Mining equipment, technology and servicesAs one of the worlds largest producers of resources and a major market for several global mining conglomerates, Australia is a prime destination for companies in the mining equipment, technology and services (METS) sector. International firms will find a ready market for innovative solutions and exciting opportunities to partner with local firms on R&D initiatives.

Diversified market looking for innovative solutions

Attracted by Australias rich and diverse deposits, several multinational resources companies have operations here, many of which have a high demand for METS and prefer their suppliers to co-locate in the country.

Australias resources sector has fuelled much of its economic development in recent years, and continuing demand from Asias growth markets for Australian commodities means the outlook remains positive. However, the sector is transitioning from the investment to the production phase. It is continually looking for ways to improve productivity and reduce costs, including through embracing innovation and adopting sustainable operating models and reporting systems. The focus is on improving asset management and maintenance, and streamlining production from existing operations.

With several projects commencing commercial production, METS companies with solutions to these key challenges will find many business opportunities in Australia.

Partnering opportunities

The Australian METS sector is globally renowned for the quality and sophistication of its products and services. The METS industry contributed more than A$90 billion to the Australian economy in 2012, with current exports exceeding A$27 billion. The industry has grown roughly five-fold over the past 15 years. As at 2013, there were more than 270 METS firms.

Australian METS firms are active across the complete mining supply chain, including exploration; mine development; education and training; equipment and supplies; mine safety and communication; mine software and consulting; water management; environmental management and rehabilitation; and mineral processing and beneficiation.

The multifaceted sector offers a wealth of partnering opportunities for new entrants on both Australian and global mining projects.

Innovative R&D

The Australian mining industry is the largest investor in R&D in Australia, injecting A$4.1 billion in 201112. There are opportunities for international METS firms to access state-of-the-art public and private R&D facilities and work with researchers who are leaders in their field.

There are also numerous private R&D facilities in Australia focused on exploration, mining technologies and training:

Alcoa Global Technology Unit Outetec Global Grinding Solutions Metso Global Centre of Excellence BASF Global Research and Development

Centre for Mining Solutions

BHP Global Technology Centre IBM Natural Resources Solution Centre Rio Tinto Materials & Sensing Centre.

Refer to An innovative location on page 20 for more details on Australias R&D capabilities.

19. http://minesense.com/news/385; www.investbrisbane.com.au/pages/Industry%20sectors/Energy-and-resources.


Growing demand for renewable energyThe Australian Government is aiming to lower greenhouse gas emissions below 2000 levels by 2020, and its proposed Emissions Reduction Fund will provide an incentive for businesses to cut their emissions. The Government has allocated A$2.55 billion to purchase emission reductions from successful bidders at the lowest cost.

The Government has also put regulatory mechanisms in place to encourage public and private organisations to be more energy efficient. For example, the National Green Leasing Policy states that all government-owned buildings and office leases of greater than 2,000 square metres must meet a minimum 4.5 star National Australian Built Environment Rating System (NABERS) rating.

Diverse renewable energy resourcesAustralia has significant and widely distributed wind, solar, geothermal, ocean and bioenergy sources that are largely underdeveloped.

Wind

Australia has some of the best wind resources in the world, primarily located in western, south-western, southern and south-eastern coastal regions but also extending hundreds of kilometres inland.20 Australias substantial onshore wind resources offer potential for large-scale grid-connected wind farms.

Solar

Australia has the highest solar radiation per square metre of any continent in the world. Opportunities exist for small- and large-scale deployments of grid-connected systems and off-grid remote locations.

Geothermal

Australia has considerable hot rock and hot sedimentary aquifer resources. The local industry is progressing through proof-of-concept projects. Opportunities exist for further demonstration projects offering first-mover advantages.

Ocean energy (wave and tidal)

Australia has large undeveloped ocean resources with demonstration projects in progress. As the technology advances towards commercial-readiness, there are substantial resources available for development.

Bioenergy

The potential bioenergy resources in Australia are large and diverse. Unused biomass residues and wastes are a significant under-exploited resource. The commercialisation of second-generation technologies will open up a range of new feedstock from non-edible biomass for biofuels and electricity generation.

Innovative R&DInternational companies can partner with and seek out commercialisation opportunities with Australias globally renowned scientific research institutions and universities, including organisations such as the CSIRO that have a number of research programs and demonstration projects focusing on renewable energy technology.

20. Geoscience Australia, Australian Energy Resource Assessment 2010 www.ga.gov.au/metadata-gateway/metadata/record/gcat_70142.

Opportunities in energy efficiency and renewables Energy efficiency and renewables are emerging industries with enormous growth potential in Australia. As the country moves to a less carbon-intensive economy, its diverse renewable energy sources and access to innovative R&D provide significant prospects for international investors. There are also opportunities to invest in the provision of off-grid solutions, including to companies in energy-intensive industries such as mining and manufacturing.


GOING OFF THE GRIDA market with significant growth potential is the off-grid industrial sector, which consumes 12.4TWh of energy per annum or 79 per cent of total off-grid electricity produced. The value of the Australian off-grid market has been estimated at A$600 million.21 This consists of approximately 213MW of renewable project opportunities in the short to medium term and an additional 854MW or more than A$2 billion in the longer term.


FIRST SOLARRio Tinto is on track to reduce power costs once it begins using solar energy at its Weipa bauxite mine in Queensland. US company First Solar will develop a 1.7-megawatt solar power plant comprising 18,000 PV solar panels that incorporate its thin-film technology. The venture is believed to be the first between the solar energy industry and a major miner.

According to Jack Curtis, vice-president of business development in Asia at First Solar, the project could act as a template for similar undertakings with other miners in Australia and overseas.

We really see this project, and Australia as a market, as the incubation location for a much more global platform for global collaboration with mining companies like Rio Tinto, said Curtis, in an interview with the Australian Financial Review.

What we find very encouraging about this project is that Rio Tinto has no reason to participate in the solar industry but for the fact that it does provide them with a commercial and economic alternative that is viable, he said.

It validates to us that solar has a much bigger role to play outside the renewable space and in much larger industries such as mining.

21. AECOM, Australian Remote Renewables Opportunities for Investment, July 2013.


Free Trade AgreementsAustralia has seven Free Trade Agreements (FTAs) currently in force, with countries covered by these FTAs accounting for 28 per cent of Australias total trade. This coverage will increase significantly as negotiations have recently concluded for an Economic Partnership Agreement with Japan and an FTA with South Korea.

A further three bilateral and four plurilateral FTAs are being undertaken. These FTAs will continue to help exporters from Australia access new markets and expand trade in existing markets. The countries covered by these negotiations account for a further 45 per cent of Australias trade.


BOREALISCanadian company Borealis provides corporate social responsibility software to the mining and oil and gas industries. In 2011, it won three major tenders after taking part in an economic mission organised by the Government of Quebec and Australias Department of Foreign Affairs and Trade.

To ensure it could provide around-the-clock support to these clients, it opened an office in Queensland, Australias most Asia-Pacific state, according to Pierre Elias, who is responsible for Asia Pacific Business Development at Borealis.

One of our key markets is South-East Asia, because it is geographically and culturally close to and influenced by Australia, said Elias. He added that Australias proximity to Borealis three focus markets Indonesia, Papua New Guinea and New Caledonia was a compelling reason to locate an office in the country. The company also has clients in Kyrgyzstan and Mongolia.

A sophisticated logistics networkAustralia has a sophisticated logistics network that offers extensive, frequent and timely services to Asia. A strong outbound shipping capacity services Asian markets, with more than 10 companies offering weekly services to China.

An investment destination for Asian firmsMany of Asias leading multinational companies have made large and ongoing investments in Australias resources and energy sector, including:

Adani Baosteel China Steel Group Ezion Formosa INPEX


FORMOSATaiwans largest private company has made the largest ever investment from Taiwan into Australia. The company has committed US$1.5 billion into a joint venture with Fortescue Metals Group for the Iron Bridge development, a 5.2 billion tonne iron ore project in the Pilbara Region of Western Australia.

KOGAS Mitsubishi Corporation Mitsui POSCO Samsung Sinopec

A gateway to AsiaTen of Australias top 12 export markets are in the Asian region. Resources and energy companies can take advantage of Australias proximity to and strong trade, investment and cultural ties with Asia to access the worlds most energy-hungry and industrialising markets.

Australia is a major supplier of resources and energy to the region. In 201213, the countrys total energy exports were A$69.5 billion. More than 87 per cent of these exports worth more than A$60 billion went to Asian countries. With vast deposits of oil, gas and mineral resources, Australia is well positioned to continue supplying Asia.


Japan 41%China 15%Other Asia 13%South Korea 11%India 7%EU 4%Other 9%

China 53

%

Japan 11%

Other As

ia 7%

South K

orea 7%

EU 5%

India 4%

Thailand

2%

Other 11%

FIGURE 5: EXPORT DESTINATIONS FOR AUSTRALIAS ENERGY COMMODITIES

FIGURE 6: EXPORT DESTINATIONS FOR AUSTRALIAS RESOURCES COMMODITIES

Source: Bureau of Resources and Energy Economics

Source: Bureau of Resources and Energy Economics

ENERGYA$69.5b

(201213)

MINERALSA$104.1b(201213)

Japan

41%

China

53%

Japan

11%Other Asia

7%

South Korea

7%

EU

5%

India

4%

Thailand

2%

Other

11%

China

15%

South Korea

11%

India

7%

EU

4%Other

9%

Other Asia

13%


Commonwealth Scientific and Industrial Research OrganisationCSIRO is ranked in the top one per cent of scientific institutions worldwide in 15 of 22 research fields. Its National Research Flagships bring together Australian universities, publicly funded research institutions, the private sector and international organisations in large-scale multidisciplinary research partnerships.

CSIRO undertakes significant research across the resources and energy sector. The Minerals Down Under Flagship works across the minerals value chain to grow Australias resource base, increase the productivity of the minerals industry and reduce its environmental footprint.

Cooperative Research CentresThe Cooperative Research Centre (CRC)22 program provides businesses with an opportunity to pursue publicprivate research collaborations that aim to achieve commercial outcomes.

Twenty-two CRCs linked to the resources and energy sector have undertaken collaborations across the world. These collaborations have involved leading Australian and international commercial players and Australias best research institutions. CRCs active in 201314 include:

CRCMining Energy Pipelines CRC CRC for Spatial Information CRC for Optimising Resource Extraction CRC for Greenhouse Gas Technologies Deep Exploration Technologies CRC.

Other public R&D facilities in AustraliaAustralia has a number of public facilities that focus on resources and energy R&D, including:

ARC Centre of Excellence in Ore Deposits (CODES) Australian Centre for Geomechanics Australian Crustal Research Centre (Monash University) Australian Geophysical Observing System Australian Resources Research Centre Centre for Exploration Targeting Centre for High Definition Geophysics Curtin Institute of Minerals and Energy Minerals and Energy Research Institute of WA University of Queensland Sustainable Minerals Institute University of Western Australia Institute of Energy

and Minerals.

R&D Tax IncentiveThe Australian Governments R&D Tax Incentive program aims to help more businesses innovate by offsetting some of the costs of R&D. It is open to firms of all sizes in all sectors that are conducting eligible R&D.

The programs two components are:

a 43.5 per cent refundable tax offset to eligible entities with an aggregated turnover of less than A$20 million per annum

a 38.5 per cent non-refundable tax offset for all other eligible entities (entities may be able to carry forward unused offset amounts to future income years).

22. www.business.gov.au23. www.chevronaustralia.com/our-businesses/technology-leadership- and-partnerships/global-technology-centre.

An innovative locationAustralia is globally renowned as an innovative country. Modern ICT infrastructure, highly rated universities and research institutes, generous R&D tax incentives for businesses, and strong intellectual property protection have helped Australia develop an impressive record of world-class R&D outcomes and capabilities.


CHEVRONS GLOBAL TECHNOLOGY CENTRE

Chevrons Global Technology Centre (GTC) in Perth was established in 2007 to align with the companys long-term energy growth strategy.

Chevron is the operator and a major joint-venture partner in the massive Gorgon and Wheatstone LNG projects. Perth was selected as the location of the GTC due to its talented regional technology experts, proximity to Chevrons interests in the region, and opportunities to pursue R&D alliances with universities and industry partners.

The centre provides R&D services and integrated technology solutions in process safety, environmental stewardship, LNG processing, subsea engineering, technical geophysics, exploration, reservoir management, enhanced oil recovery and deep water operations. It works closely with Curtin University, the University of Western Australia and the CSIRO.23


IBMS NATURAL RESOURCESSOLUTION CENTRE

Located in Perth, IBMs Natural Resources Solution Centre is a state-of-the-art facility where resources and energy companies can fast-track the development of innovative technologies and business strategies.


Exploration Development IncentiveNew discoveries are vital to the resources and energy sector. To encourage exploration for new mineral deposits, the Australian Government is providing A$100 million for an Exploration Development Incentive. The incentive allows eligible exploration companies to deduct the cost of greenfield exploration costs against their taxable income.

One-stop shop for environmental assessmentsThe Australian Government is committed to removing perceived green tape. In December 2013, it reached an agreement with all Australian state and territory governments to establish a single approval process for environmental assessments and approvals.

The one-stop shop eliminates duplication and expedites approval processes, making it easier and faster for companies to embark on exploration projects while ensuring they meet high standards of environmental protection.

The Australian Government has also signed a new assessment bilateral agreement with the Queensland Government. A bilateral assessment agreement with the New South Wales Government is being finalised.

Streamlined regulatory processesIn February 2014, a new streamlined approach for offshore petroleum and greenhouse gas activity environmental approvals came into effect, reducing regulatory burden while maintaining high environmental standards. The process removes duplication between two sets of laws, and is expected to save industry and environmental groups an estimated A$120 million a year.

The National Offshore Petroleum Safety and Environmental Management Authority (NOPSEMA) will be the sole assessor for offshore petroleum and greenhouse gas activities in Australian waters. Established in 2012, NOPSEMA ensures Australias offshore petroleum and greenhouse gas storage industries are safe and environmentally responsible, and conform to best-practice regulations.

Boosting national productivity and competitivenessThe Australian Government is undertaking a number of initiatives to boost the productivity and competitiveness of the resources and energy sector, particularly in relation to skills and labour. These include:

conducting a review of the vocational education and training sector

improving labour laws and reviewing Australias workplace relations framework

reviewing the working visa requirement and framework.

A supportive regulatory environmentThe Australian Government recognises the significant contribution of the resources and energy sector to the economy. It has announced several measures to encourage investment, including investing more than A$125 million in the resources and energy sub-sectors that are crucial to Australias long-term economic growth and future prosperity.


Key industry and government agencies

Australian Government

Department of Industry Australian Government agency focused on driving economic growth, productivity and competitiveness by bringing together industry, energy, resources, science and skills.

www.industry.gov.au

Bureau of Resources and Energy Economics

Provides independent economic research, data, analysis and advice to governments, industries and other stakeholders on issues affecting Australias energy and resources sector.

www.bree.gov.au

Geoscience Australia National geoscience agency that provides geoscientific advice and information to the Australian Government, industry and other stakeholders.

www.ga.gov.au/minerals www.ga.gov.au/energy

State and territory governments

Australian Capital Territory Government www.business.act.gov.au

New South Wales Government www.business.nsw.gov.au/invest-in-nsw

Northern Territory Government www.investnt.com.au

Queensland Government www.business.qld.gov.au/invest

Government of South Australia www.dmitre.sa.gov.au/invest_in_south_australia

Tasmanian Government www.development.tas.gov.au/invest

Victorian Government www.invest.vic.gov.au

Government of Western Australia www.dsd.wa.gov.au


Industry organisations

Austmine An industry body representing the Australian mining equipment, technology and services sector.

www.austmine.com.au

Australian Petroleum Production and Exploration Association

The peak body representing Australias oil and gas exploration and production industry.

www.appea.com.au

Industry Capability Network An independent networking organisation that connects local suppliers and service providers to meet the requirements of local projects.

www.icn.org.au

Minerals Council of Australia Represents Australias exploration, mining and minerals processing industry, nationally and internationally, in its contribution to sustainable development and society.

www.minerals.org.au

Clean Energy Council The peak body representing Australias clean energy sector. An industry association made up of more than 550 member companies operating in the fields of renewable energy and energy efficiency.

www.cleanenergycouncil.org.au

Sustainable Energy Association (SEA) Australia

The SEA supports and promotes the sustainable energy industry across Australia, to give voice to those with an interest in sustainable energy and to promote the development and adoption of sustainable energy technologies and practices.

www.seaaus.com.au

The Australian Trade Commission Austrade contributes to Australias economic prosperity by helping Australian businesses, education institutions, tourism operators, governments and citizens as they:

develop international markets win productive foreign direct investment promote international education strengthen Australias tourism industry seek consular and passport services.

What we provide

Working in partnership with Australian state and territory governments, Austrade provides international investors with the information needed to establish or expand a business in Australia. Services for international investors include:

initial coordination of investment enquiries and assistance

information on the Australian business and regulatory environment

market intelligence and investment opportunities identifying suitable investment locations and

partners in Australia

advice on Australian government programs and approval processes.

Accessing Austrades investment services

Austrades investment services are free of charge and are focused on productive foreign direct investment outcomes of strategic importance to the Australian economy, to build capability and enhance productivity.

Austrade does not assist with real estate and portfolio investments, sales or representation offices, straight acquisitions, hostile takeovers or investments by individuals.

W: www.austrade.gov.au/invest E: [email protected]

How Austrade can help

austrade .gov .au/invest

Documents

Investment-Opportunities-in-Australian-Resources-and-Energy.pdf