A deal with the devil that keeps Queensland poorer longer

Queenslanders can be proud of their LNG sector. The first tanker left Gladstone for Asia in January 2015, and within six years, Australia had catapulted into top spot as the world’s largest exporter of LNG.

To execute such complex engineering so successfully and so quickly is an underappreciated miracle of Australian industry.

And right now, things are looking pretty rosy for Australian gas. Global prices are high, demand is up, and buyers are looking for reliable sellers (like us).

But beyond the current glow, things look much grimmer for Queensland LNG long-term.

Even with the temporary loss of Qatari supply (because of the Iran war), the world is entering a gas glut. We’re about to be flooded with cheap gas coming out of the US that will depress prices again, probably for a decade.

In a buyer’s market, the most expensive player will lose. Sadly, that’s us. Australia’s cost of production is about a third higher than that of the US, and nearly triple Qatar’s – our two biggest competitors.

And over the long term, our big customers are just going to buy less gas.

About 80 per cent of Australia’s LNG exports go to Japan, China, and South Korea, and all three countries are looking to reduce their reliance on imported gas as they chase things that gas can’t deliver them – cheaper power, energy sovereignty, and decarbonisation.

Yes, we might find new customers. But every country has just lived through the same energy shock that we have, and all are re-evaluating whether relying on expensive, imported fuels really is the path to prosperity.

The brutal truth is that Australian LNG exports peaked in 2022 and have declined ever since, and that decline is not likely to turn around.

This is a problem because Australia gets rich off LNG. Last year, LNG exports were worth $60 billion, second only to iron ore. That’s not easy money to part with.

But we need to be real. Australia will eventually have to get out of LNG because selling so much of the stuff costs us all by driving the changes to our climate that make our farming harder, our floods and droughts worse, and drag on the economy.

Anyone who sells you only one side of the story – that LNG is all good or all bad – is selling you a fantasy. Australia’s reliance on LNG exports is actually a deal with the devil – get rich quick but stay poorer longer.

This is the complex reality of LNG – it’s in Australia’s interests to sell it in the short term and quit it in the long term.

The question for Queensland is not whether LNG is good or bad, but how do we harness it to maximise its benefit to Australia whi