Just in case you were thinking of looking at the Resource Service Sector…
Yesterday, the Bureau of Resources and Energy Economics released their biannual Resources and Energy Major Projects—April 2014 report, providing analysis on resources, energy, infrastructure and processing projects.
In the six months to April 2014, 21 resource projects worth a combined $25.6 billion were completed. This marks the beginning of the shift from the construction to production phases, with substantial increases in iron-ore, coal and gas volumes.
According to the Bureau of Resources and Energy Economics (BREE), there are now 48 projects at the committed stage with a combined value of $229b, and this is $39b – or 15 per cent – down on the combined value of $268b from 12 months earlier. While the number of completed projects contributed to the decline, this was partially offset by the recent approval of the $10.7b Roy Hill iron ore project, and a handful of other smaller projects.
It’s interesting to note the 14 LNG, gas and oil projects account for $198b – or 86 per cent – of the current total committed investment, and a number of these projects will be moving into the production phase over the next two or three years.
BREE estimates the combined value of committed and likely resource projects will decline by 75 per cent, to an estimated $55 billion in the four years to 2018. There’s an opportunity to sustain higher levels of investment if projects at earlier stages of development proceed through the pipeline. The Australian Energy Sector, however, will need to implement aggressive efficiency and cost-saving measures for any new greenfield projects to get the go-ahead.
To see our previous posts on resource project investment, click here and here.
Chief Executive Officer of Montgomery Investment Management, David Buckland has over 30 years of industry experience. David is a deeply knowledgeable and highly experienced financial services executive. Prior to joining Montgomery in 2012, David was CEO and Executive Director of Hunter Hall for 11 years, as well as a Director at JP Morgan in Sydney and London for eight years.
This post was contributed by a representative of Montgomery Investment Management Pty Limited (AFSL No. 354564). The principal purpose of this post is to provide factual information and not provide financial product advice. Additionally, the information provided is not intended to provide any recommendation or opinion about any financial product. Any commentary and statements of opinion however may contain general advice only that is prepared without taking into account your personal objectives, financial circumstances or needs. Because of this, before acting on any of the information provided, you should always consider its appropriateness in light of your personal objectives, financial circumstances and needs and should consider seeking independent advice from a financial advisor if necessary before making any decisions. This post specifically excludes personal advice.
