PERTH (miningweekly.com) – Australia’s long-term gas exports were expected to benefit from the growing demand of emerging economies in the Asia region, the Office of the Chief Economist reported on Friday.

In the ‘Gas Market Report 2015’, the Department of Industry, Innovation and Science noted that despite current challenges, which included downward pressure on commodity prices, the fundamentals remained strong for the gas sector, as global gas demand was set to increase by around 50% to 2040.

In China, total gas consumption was expected to more than double by 2030 and India’s liquefied natural gas (LNG) demand was expected to nearly double by 2019/20, as it sought to provide reliable electricity to more than 300-million people for the first time.

More broadly, non-Organisation for Economic Cooperation and Development (OECD) countries use about one-quarter of the electricity demand of OECD countries on a per capita basis. The report noted that as these countries developed, however, living standards and electricity consumption would rise, driving increased demand.

The report added that Australia’s reputation as a stable and reliable supplier of LNG and the country’s proximity to key markets provided Australia with a competitive advantage to meet this demand, which was expected to result in Australia providing 40% of both Japan and China’s LNG and 25% of South Korea’s by 2019/2020.

With this increasing demand, LNG would provide the strongest growth in resource export earnings, increasing to A$45-billion by 2019/20 when Australia was expected to become the world’s largest LNG exporter. This is two-and-a-half times the A$18-billion of LNG export earnings last financial year.

However, the report warned that the current challenges facing Australian producers had put strain on the country’s domestic market and that its eastern market required more supply.

“The government is focused on this issue and is working on a range of reform measures to improve the way the market works and to boost competition, including leading the development of a national gas supply strategy through the COAG Energy Council,” the report said.

“The government remains focused on implementing initiatives to help Australia capitalise on growing demand for our commodities both at home and abroad, including removing $4.5-billion of red tape from the economy. A continued focus on innovation, exploration and new production capacity in our gas market will help to overcome short-term challenges and enhance our opportunities for the future.”

The Australian Petroleum Production and Exploration Association (Appea) has echoed the report’s sentiment, with CEO Malcolm Roberts saying on Friday that Australia’s reputation as a reliable supplier of LNG was growing.

“Our gas is allowing many other countries to achieve environmental improvements while providing energy to their communities. And while production continues to grow, Australia will continue to see substantial economic benefits in the form of community investment, jobs, royalties and taxes.

“We must continue to take advantage of rising LNG demand in our region. The A$200-billion investment in current Australian projects augurs well for the long term.”

Roberts said coherent energy policy frameworks were needed to address the tightening eastern Australia gas supply market emphasised in the report.

“As the report makes clear, we have more than enough natural gas resources to meet both domestic and export demand, yet market pressures cannot be eased if gas remains trapped underground.”