Western Australia's subdued oil and gas sector may have to wait a decade for a recovery, a prominent academic says.
Natural gas prices have fallen as new projects come online and the outlook is unlikely to improve as more US projects are commissioned over the next few years, University of Western Australia chair of economics Peter Hartley said.
"Our own modelling work, trying to forecast what might happen with natural gas, it's not a great story for WA," Mr Hartley told a business lunch.
"It indicates that probably not until the second half of the twenties will there be a substantial opportunity for Australian natural gas projects."
Australia is facing a weak market for liquefied natural gas (LNG) after the completion of seven major local LNG projects in recent years, and a collapse in oil prices, Mr Hartley also warned.
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He predicts oil prices will trade around $US33 a barrel by March 2017, down from the current price of $US38 a barrel.
Iron ore prices are also unlikely to recover over the next year, Mr Hartley said, predicting a price of around $US48 a tonne in March 2017, down from the current price of $US55.
A global oversupply of iron ore has weighed on prices as Chinese steel demand continues to soften.
Also speaking at Thursday's event, BHP Billiton's Vice President of Strategy, Development and Planning Tony Ottaviano defended the company's high production levels in the face of the oversupply.
"When I hear the doomsayers say iron ore is yesterdays news, I sit back and I say $70 to $80 billion of investment needs maintenance, needs replacement, needs sustaining, needs new skills and when you see the sort of EBITDA margins we make I cannot understand why we wouldn't operate these assets to their full potential," he said.
