Gorgon construction complete as Australia’s gas investment boom shifts to production
Wednesday, Jul 26, 2017
Production is now underway on the third and final train of the $61 billion Gorgon LNG project in Western Australia. This marks the end of construction at Australia’s largest gas development, and follows on from the earlier completion of Queensland’s three mega-projects.
The value of gas projects has fallen from around half of all work underway two years ago, to less than a third.  Further falls are expected with construction soon to wrap up at the $45 billion Ichthys and the $34 billion Wheatstone projects.
Releasing the June quarter Deloitte Access Economics Investment Monitor, lead author and Deloitte Access Economics partner Stephen Smith said: “As the last of these major gas investment projects nears completion, a big story over the last year has been the surge in company profits which, before income tax, increased by almost one third over the year to March 2017.
“This was largely driven by mining profits, which rose by 112%, after higher commodity prices in late 2016 and early 2017 boosted earnings. However, this is not expected to translate into additional large-scale mining investment, as higher commodity prices have since moderated and new supply continues to enter the global market.
“Profits have also lifted outside of the mining sector, up by almost 17% over the past year.  This is the fastest growth in profits seen in the non-mining sector since 2010. Profits in both professional services and administrative services rose by more than 50%, while there were strong gains in the manufacturing sector. Although these increases are modest when compared to those in the mining industry, they undoubtedly lift the incentive for businesses to invest across those sectors.
Smith said that commercial construction over the past year had again been disappointing.
“Looking ahead, however, there has been a solid lift in commercial approvals,” he said.  “And the better news was broad-based, with planned work rising in sectors such as retail, offices, accommodation, health care, and entertainment and recreation.”
Key figures for the June quarter included:

  • The value of projects in the Investment Monitor database fell by $46.8 billion during the June quarter to $744.7 billion –  a 5.9% decrease from the previous quarter, and positions the Investment Monitor database at a seven year low
  • The value of definite projects (those under construction or committed) decreased over the quarter to approximately $350 billion – an 18.1% decrease on June 2016, due in part to the completion of the Gorgon LNG project
  • The value of planned projects (those under consideration or possible) increased by around $1.1 billion over the quarter, largely unchanged over the past year.
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