Australia’s oil, gas capex at 12-year low in 2020-21

Capital expenditure (capex) in Australia's oil and gas sector dropped to a 12-year low in 2020-21 fiscal year to 30 June following the fall in global oil and gas prices because of the impact of the the Covid-19 pandemic. But spending by upstream firms started to recover during April-June in line with firmer oil and gas prices.

Oil and gas spending in 2020-21 represented the lowest spend by the upstream sector for a fiscal year since the A$7.35bn in 2008-09, according to Australia's Bureau of Statistics (ABS) data.

Rebounding upstream spending during April-June quarter was the highest quarterly spend since A$2.36bn in January-March 2020, when global oil prices started to slide in response to the pandemic. Argus' dated Brent crude price was assessed at $70.88/bl on 25 August, well above the long-term low of $19.17/bl in late April 2020 and from above $85/bl in October 2018.

Capex by metals producers in 2020-21 marked the highest spend for a fiscal year since the record A$27.14bn in 2012-13. The ABS data do not break down the segments of the mineral sector, but iron ore represents a significant share of the capex given it is Australia's largest export commodity by volume and value.

By Kevin Morrison

Australia resource capex (A$mn) Apr-Jun &#39;21 Jan-Mar &#39;21 Apr-Jun &#39;20 2020-21 2019-20 % &#177; 2020-21 vs 2019-20 Coal 1,555 1,270 1,680 6,044 7,300 -17.2 Minerals 5,032 4,498 4,803 19,366 16,094 20.3 Oil and gas 2,172 1,688 2,099 7,553 9,561 -21.0 Total 9,102 9,016 9,181 36,104 35,155 2.7 Source: ABS

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