Outstanding LNG prospects in WA: BHP

BHP Billiton Ltd said today it had "outstanding" growth options in Australia, with several major projects in Western Australia under assessment for future development.

These projects included the Thebe, Scarborough and Browse liquefied natural gas (LNG) projects in WA, BHP Billiton's Australia country manager Phil Byrne said in an analyst presentation.

Mr Byrne said the underlying demand growth for LNG was likely to remain "strong", although a period of near-term volatility was expected.'

Meanwhile the sinking Australian dollar is likely to act as a double-edged sword for domestic petroleum producers as it offsets a declining crude oil price, but adds pressure to future developments.

The Australian dollar today opened at five-and-a-half year low of 61.96 US cents, after crude oil fell to a 16-month low on Friday despite a decision by the Organisation of Petroleum Exporting Countries (OPEC) to cut production.

The falling Australian dollar acts as a buffer to a drop in crude, which is priced in US dollars, with domestic producers receiving in excess of $A100 per barrel at today's prices.

Ord Minnett senior research analyst Peter Arden said producers would continue to deliver "good margins" but the declining dollar would put pressure on the capital estimates of future projects.

"The big ticket items - the jackets, the rigs - they are imported and they are priced in US dollars," Mr Arden said.

"There really has been a big blowout in capex [capital expenditure] that way."

The crude oil price and Australian dollar have tracked lower since mid-July, shedding respectively about 56.4 per cent and 38.4 per cent, amid fears of a global recession.

OPEC's decision to cut production by 1.5 million barrels per day failed to ease demand concerns and pushed the crude oil price for December delivery $US3.69, or 5.4 per cent, lower to $US64.15 a barrel.

"Markets are concerned about the outlook for oil consumption in the event of a severe global slowdown, which would possibly encompass a recession in the major developing economies," Commonwealth Bank commodities strategist David Moore said.

"Oil demand is sensitive to the economic cycle and that's the reason for oil prices coming under that sort of pressure."