Trump’s America First energy plan could impact Australian LNG

Australia’s LNG industry is under threat, after the Trump administration announces new energy policies to see a boost in US shale oil and gas production.

The America First Energy Plan was updated on the White House website shortly after President Trump’s inauguration this week.

“Energy is an essential part of American life and a staple of the world economy. The Trump administration is committed to energy policies that lower costs for hardworking Americans and maximize the use of American resources, freeing us from dependence on foreign oil,” the website stated.

“For too long, we’ve been held back by burdensome regulations on our energy industry.

“President Trump is committed to eliminating harmful and unnecessary policies such as the Climate Action Plan and the Waters of the U.S. rule. Lifting these restrictions will greatly help American workers, increasing wages by more than $30 billion over the next 7 years.”

The United States is expected to “take advantage” of the estimated $50 trillion in untapped shale, oil and natural gas reserves.

Australia is well on its way to being the world’s biggest LNG exporter by 2020. But Trump’s new policy could threaten the country’s position in the market.

Higher gas ­production in the United States would effect global LNG prices, according to analysts, while more US oil would impact contract prices received by Australia’s LNG projects.

“Any policies that Trump implements — lower taxes, less regulation, opening up more areas for drilling — all imply more production, which implies lower US gas prices, which means lower cash costs for US LNG exporters, and lower spot prices in Asia,” Wood Mackenzie analyst Saul Kavonic said yesterday.

Mr Kavonic told The Australian Mr Trump’s pro-drilling platform could inspire extra US LNG volumes at the same time that onshore gas ­restrictions in NSW, the Northern Territory and Victoria could result in more domestic demand for Queensland gas.

He said unless Australia undergoes policy changes, Trump’s policy will see America overtake Australia to become the world’s top LNG exporter.

Wood Mackenzie has forecast US LNG exports will almost treble this year to about 11 million tonnes (up from four million in tonnes in 2016).