Regulation News

Resources and energy projects to decline

The report Resources and Energy Major Projects ? April 2013 is the Bureau’s (BREE) bi-annual publication that provides an analysis of resources, energy, infrastructure and processing projects. 
The data comes from a variety of sources and provides a snapshot, at the end of April 2013, of the pipeline of investment in Australia’s resources and energy sectors.
However, while the stock of investment in committed resources and energy projects remained at $268 billion, according to the report, this may signal a return to a more even economy.
The resources boom provided additional sources of income for Australia and it has performed well enough to keep the country out of a deep recession but forecasts are that it has peaked.
Resources, energy investment to decline
According to the report, the likely scenario for investment in resources and energy is that it has already peaked at about $268 billion last year. It will start falling sharply from next year before tailing off to only about $25 billion in 2018, roughly around the levels experienced in 2007.
BREE?s reports state that the number of projects at the committed stage has decreased to 73 in April 2013, as a result of 21 projects being completed. 
Of the 73 projects still under construction, 40 are minerals projects, 18 are gas and petroleum projects, and 15 are infrastructure projects.
?High value projects continue to be the main driver of the record high levels of committed investment in the resources and energy sectors,? said Professor Quentin Grafton, executive director and chief economist at BREE. ?Mega projects valued at over $5 billion account for around 80 per cent of the $268 billion in committed investment. 
?The decline in the number of committed projects reflects the emerging trend for high value projects at the feasibility stage to be delayed or cancelled, while the value of committed investment has remained close to record high levels due to cost increases to several key projects.?
BREE estimates that around $150 billion of high value projects have been delayed or cancelled since April 2012.
For the first time, BREE has undertaken a forward projection of the stock of committed investment in the resources and energy sectors. In a scenario based on projects that BREE assess as “likely” to progress, the stock of committed investment has peaked and is projected to decline over the next five years as a result of fewer high value projects progressing through to investment to offset the completion of the LNG projects currently under construction.
A download of the Resources and Energy Major Projects report is available at the BREE website.
Sources: Bureau of Resources and Energy Economics, Business Spectator, SmartCompany

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