Australia's liquefied natural gas exports will jump more than 60 per cent over the two years despite a subdued outlook for oil prices and the potential for government restrictions on gas exports.
LNG exports are set to rise from an estimated $23 billion in 2016/17 to $37 billion in 2018/19, overtaking coal as Australia's second-largest export earner, the federal government's Department of Industry, Innovation and Science said in a quarterly report.
Despite the sharp increase, the department has downgraded previous expected earnings from LNG exports up to 2018/19 by $5.6 billion to reflect a more subdued view for oil and LNG prices and volumes.
The federal government in April announced it will impose export controls on operators when there is a shortfall of gas supply in the domestic market, as part of an effort to moderate domestic gas prices.
The report has also forecast a slight decline in Australia's overall export earnings from resources and energy over the next two years, on the back of declining prices for iron ore and coal and moderating demand.
Export earnings are now expected to touch $202 billion in 2017/18, down $13 billion from the department's estimate three months ago, and $200 billion in 2018/19, a decrease of $8.3 billion from the previous estimate.
It also downgraded export earnings for 2016/17 by nearly $10 billion.
"The downward revision primarily reflects an earlier than expected decline in iron ore prices since the March 2017 report," chief economist Mark Cully said in the report.
An anticipated delay to the start-up of the Ichthys LNG project off Western Australia and downward revisions to the oil price outlook also contributed to the export earnings downgrade, he said.
The department expects iron ore prices to remain around $US55 a tonne in the second half of 2017 but decline to an average of $US48 a tonne in 2018 and $US47 a tonne in 2019, as steel production declines in China.
Benchmark contract prices for coking coal are expected to average $US191 in 2017 but will likely decline 28 per cent to $US137 a tonne in 2018 and fall further to $US119 a tonne in 2019, as coal production in China increases.
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