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Australian LNG industry still at a disadvantage on carbon pricing: APPEA

Sydney (Platts)--14 Jul 2013 1112 pm EDT/312 GMT


The Australian LNG industry will still be at a disadvantage to its international competitors should newly installed Prime Minister Kevin Rudd make good on a promise to drop Australia's carbon tax in favor of a floating price, the Australian Petroleum Production & Exploration Association said Sunday.

"A floating price under the carbon pricing mechanism still represents an addition to the cost structure of Australian LNG exporters competing in global markets," APPEA said.

The association's chief executive David Byers pointed out that there was no international carbon price in operation.

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"So while the move to a floating price may represent a short-term lowering of the price facing liable entities, Australia is still imposing a cost on its gas export industry that will not be borne by any of its LNG competitors," Byers said. "This will diminish its international competitive standing."

APPEA estimates that for every metric ton of carbon dioxide associated with the production, export and consumption of Australian LNG, up to 9.5 metric tons of carbon emissions are avoided in customer countries when LNG is used in place of coal.

Prime Minister Rudd said Sunday that his Cabinet was working toward a floating price to replace the A$23 ($21)/mt tax on carbon that was introduced in Australia on July 1, 2012.

Australia is an emerging powerhouse in global LNG production. Seven new plants are currently under construction around the nation, which will lift its nameplate LNG production capacity from around 24 million mt/year currently, to more than 80 million mt/year by 2017, potentially making it the world's biggest producer ahead of current leader Qatar.

--Christine Forster, christine.forster@platts.com

--Edited by Deepa Vijiyasingam, deepa.vijiyasingam@platts.com

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