Australian liquefied natural gas export projects face being shelved if they do not adapt to rising cheap competition, French bank Societe Generale said on Wednesday.
The bank said that the prospects of new exporters emerging in the LNG market in the next few years would put make it more difficult for current costly projects, mainly in Australia, to compete.
"With rampant cost inflation in the face of an increasingly price-sensitive customer base, these large-scale, expensive projects simply look cumbersome and outdated in the context of intensifying global competition," the bank said in a research note.
"The emergence of the US and Canada as potential major LNG exporters will create a new environment in which Australia will find it more difficult to compete," the bank added.
A boom in unconventional gas exploration in North America has led to a collapse in US natural gas prices, meaning that potential American exporters will be able to offer their gas at lower prices than Australia, where production costs are higher.
The US is planning to export its first LNG cargoes in 2015 through the Sabine Pass terminal in Louisiana, and although Canadian projects are at earlier stages of development, energy research and consulting firm Wood Mackenzie says Canada has huge untapped gas export reserves.
The International Energy Agency (IEA) says that it projects North American LNG exports to reach 35 billion cubic metres (bcm) by 2020 and more than 40 bcm by 2035.
That would make North America a mid-sized gas exporter, at around 40 per cent of the annual supplies of Qatar, the world's top LNG exporter, or Norway, Europe's second biggest supplier after Russia.
In the coal market, SocGen said it did not see much upside to prices as long as demand remained weak during the economic slowdown, but that a price floor was emerging due to miners cutting production in order to protect their margins.
"The excess of supply in the seaborne market - partially stemming from less rampant emerging-market demand - is going to cap prices, (but) producers have been responding to economic difficulties by cutting or delaying production, and we expect this supply-side trend to provide a floor around the $95 per tonne level for calendar-year products," the bank said.
API2 2013 coal swaps futures prices are currently around $95.50 a tonne, down almost 30 per cent since summer last year.
Morning & Afternoon Newsletter