Industry Comment - Santos Limited

Santos Limited

The historic strengthening in long-term oil prices is fuel for Australia to develop its natural gas resources for world markets.

Taking full advantage of such opportunities will, however, require massive investment in infrastructure and an internationally competitive regulatory framework.

While nominal oil prices have been extremely volatile over the past 30 years, there is a long-term upward trend.

And while Australia is not a major oil producer, it does have abundant supplies of natural gas.

Developments in shipping and pipelines are now reducing the tyranny of distance and breaking down the barriers of remoteness which have confined about 70 per cent of Australia’s gas sales to domestic markets.

These sales have historically been, by world standards, at very low prices, and such cheap sales are not in the interest of future generations.

With Australia’s low sovereign risk, improving transportability and strong world energy prices, the nation has an opportunity to become a major supplier of natural gas to global markets at global prices.