So why have prices risen less than inflation in the last 12 months and fallen in the last quarter?
Why are vacancy rates up by so much in the last year?
It is all well and good pontificating about why prices won't fall, but the fact is that they are falling. How do you explain that?
Hey Jimbo. RP data is reporting prices increased almost 1% last week. It was negative 1.5% last week now only negative 0.6% now. Year on year has also increased to be above inflation.
Why are prices rising when you claim the sky is falling, how can house prices rise when the price of Iron Ore is falling?
Hey Jimbo. RP data is reporting prices increased almost 1% last week. It was negative 1.5% last week now only negative 0.6% now. Year on year has also increased to be above inflation.
Why are prices rising when you claim the sky is falling, how can house prices rise when the price of Iron Ore is falling?
ahaha... still checking everyday Mike... how do your nails look?
About 50% of housing units selling to investors? 89% of them using Interest only loans with home equity and superannuation savings as deposits? Not your traditional property market now is it Mike? More like a last gasp of a bubble if you ask me.
It may no be as completely peachy but oncoming LNG gas exports is certainly a healthy positive and like the fiscal cliff I doubt the doomers will get their predicted dramas from the "so called" CAPEX cliff.
Again you incorrectly base the prospects of Gorgon on pre-2012 spot prices when it was actually conceived on long term contract prices of $13-$14 MBtu (locked in on future market expectations). These forecasts turned out to be completely incorrect as my previous post laid out, failing to anticipate the impact of the US low cost producers.
"Thirty per cent of its power generation was nuclear before the Fukushima earthquake and tsunami".
"Now they have about two out of 50 generating units operating."
This would imply that the impact on Japanese LNG demand due to the reduced reliance in nuclear generation has already filtered through.
Compounding this, the vast majority of world LNG production and exportation is yet to come online and Japanese energy generation has plateaued. Energy consumption in 2004 was 1031 TWh, in 2012 it was 1003 TWh. http://en.wikipedia.org/wiki/Energy_in_Japan
Further significant downward pressure on prices will be applied when the US starts to export from 2015.
I'm not denying that LNG exports are going to generate a lot of revenue, but revenue does not immediately equate to increased CAPEX if there is not a business case for further ventures.
When it was priced at US$37bn (now US$54bn), Gorgon targeted to sell 85% of production at $13-14 MBtu to service its debt. If we consider Gorgon to be a good indicator for the base cost of LNG production in Australia, and we can't do it cheaper than the forecast spot price, quite simply no-one will invest any further here.
This is already evident in QLD with all the big players wary of committing to their phase 2 CSG ventures. Shell even keep deferring Arrow phase 1.
Hey Jimbo. RP data is reporting prices increased almost 1% last week. It was negative 1.5% last week now only negative 0.6% now. Year on year has also increased to be above inflation.
Why are prices rising when you claim the sky is falling, how can house prices rise when the price of Iron Ore is falling?
Jimbo, rp data is pretty fickle. I'll be interested in it when and if it breaches 600.
Arrow are contemplating a 36" x 400 km pipeline and a smaller LNG facility now, but the number crunching investment vs forecast scenario is not looking feasible.
Arrow are hard pressed to prove what shell already knew before they pulled out of Australia.
It's not easy for big multinationals doing business here, unless the wages are gutted by another 50%!!!!
ahaha... still checking everyday Mike... how do your nails look?
Pretty disappointing spring so far.
The data we see now does not reflect spring. Even RP data lags by a few months, we wont see spring data for a few more weeks.
What is surprising is we have not seen a large increase in stock on market for months, I would have expected to see a bounce of a 1,000 properties or more being listed for the spring/summer period. Perhaps it will still come, or sales have remained high enough to keep supply down.
Even rental stock has remained stable or fallen over the past few months, which is also surprising. Demand remains strong for rentals despite a large increase in construction of new homes.
Again you incorrectly base the prospects of Gorgon on pre-2012 spot prices when it was actually conceived on long term contract prices of $13-$14 MBtu (locked in on future market expectations). These forecasts turned out to be completely incorrect as my previous post laid out, failing to anticipate the impact of the US low cost producers.
"Thirty per cent of its power generation was nuclear before the Fukushima earthquake and tsunami".
"Now they have about two out of 50 generating units operating."
This would imply that the impact on Japanese LNG demand due to the reduced reliance in nuclear generation has already filtered through.
Compounding this, the vast majority of world LNG production and exportation is yet to come online and Japanese energy generation has plateaued. Energy consumption in 2004 was 1031 TWh, in 2012 it was 1003 TWh. http://en.wikipedia.org/wiki/Energy_in_Japan
Further significant downward pressure on prices will be applied when the US starts to export from 2015.
I'm not denying that LNG exports are going to generate a lot of revenue, but revenue does not immediately equate to increased CAPEX if there is not a business case for further ventures.
When it was priced at US$37bn (now US$54bn), Gorgon targeted to sell 85% of production at $13-14 MBtu to service its debt. If we consider Gorgon to be a good indicator for the base cost of LNG production in Australia, and we can't do it cheaper than the forecast spot price, quite simply no-one will invest any further here.
This is already evident in QLD with all the big players wary of committing to their phase 2 CSG ventures. Shell even keep deferring Arrow phase 1.
I have not incorrectly said anything - I simply quoted the figures that are available for the proposed income from Gorgon. You are the one with the big story that these figures may not pan out.
Quote:
When it was priced at US$37bn (now US$54bn), Gorgon targeted to sell 85% of production at $13-14 MBtu to service its debt.
Can you provide a link for this information please?
So are you still saying Gorgon will not make as much as it has planned back in 2007? Given that Gorgon has sold 65% of a 30 year supply and the fact that LNG prices are higher now than 2007 when the report was drawn up.
Are you saying that recent reports are wrong and Japan will not increase its use of LNG at all?
And is it seriously your call that no-one will invest in any more gas projects in Australia?
Revenue is better than CAPEX in every way. CAPEX is just debt to invest in future revenue. Maybe it is better not to rush to develop more facilities. It is doubtful that our economy even needs it. We have massive facilities about to come online.
There are many many ifs and buts about US LNG exports and whether they will actually reach the market at these lower prices, it is not a cut and dried case that US LNG will prove as cheap as you are assuming.
Quote:
More here US and global LNG supply shortfall: there is uncertainty as to when the US LNG projects (along with the Australian and East African projects) will begin operation (particularly if they are unable to secure long-term off-take commitment), which may have significant repercussions on price. Any delay could exacerbate the anticipated global LNG supply shortfall (which BG estimates will be 150Mtpa by 2025), which in turn may increase the price of LNG and could narrow the price differential between the Henry Hub index and the JCC index (depending on developments in the global oil industry).
Pricing of Asian LNG sale and purchase contracts: a shift from the JCC index or the gradual emergence of an Asian LNG spot market could reduce the price competitiveness of US LNG exports (especially given the additional transportation and liquefaction costs). As mentioned earlier, Platts has launched JKM as the index for spot ex-ship deliveries into South Korea and Japan. However, given the large capital investment that is required by major LNG projects (particularly the greenfield projects in Australia and East Africa), a substantial shift away from crude oil-linked pricing is unlikely (there is speculation that many LNG projects would not reach FID if their entire off-take was linked to natural gas prices). Whilst the Henry Hub price index may influence the pricing of Asian LNG sale contracts, over time it is uncertain that Henry Hub (which is historically volatile and based on factors which are independent of natural gas supply and demand patterns in Asia) will necessarily be an appropriate (or cheaper) way of pricing Asian LNG.
My view remains that the Gorgon projects and other new gas facilities will add serious revenue to this country's economy. It is likely that Australia's GDP will grow strongly and all the predictions are that it will grow strongly. I really do not understand why bears are negative about this economy at all.
lulldapull
28 Sep 2014, 01:48 PM
Donno, Shell have divested Arrow, long ago.
Arrow are contemplating a 36" x 400 km pipeline and a smaller LNG facility now, but the number crunching investment vs forecast scenario is not looking feasible.
Arrow are hard pressed to prove what shell already knew before they pulled out of Australia.
It's not easy for big multinationals doing business here, unless the wages are gutted by another 50%!!!!
Rubbish Lulldapul Shell have not divested Arrow, and they have not pulled out of Australia.
They have in fact sold assets to prepare for this and other investments. While these execs complain about productivity being below par (what else do you expect) no-one has ever suggested wages cut by 1/2. Australia consistently gets voted the top country for mining investment.
From July 2014:
Quote:
Mr van Beurden said the nation’s location, stability and expertise still gave it an edge in meeting growing Asian LNG demand that showed no signs of slowing.
Speaking on the sidelines of the B20 conference in Sydney, on his first visit to Australia since taking the chief executive’s role, Mr van Beurden said: “I still believe Australia is a fantastic investment destination for us.
“The (LNG) demand is there and we very much like investing in an OECD country that is so well placed geographically and in terms of capability, and which we know well because we have been here for more than a century.”-------- Mr van Beurden said Shell was keen to increase its investment in Australia over the next five years through development of Browse and Arrow, through a tie-up with another Gladstone LNG plant because Asian LNG demand is expected to underpin a doubling of global LNG demand between now and 2030.
“There are other suppliers coming into the market: Papua New Guinea, East Africa, Indonesia,” he said.
“But Australia does have a lot of infrastructure, capability and experience in the industry. It’s a bit of a tight labour market but labour is, in principle, available.
“I still think Australia has the edge and we are keen to invest more in it.”
Definition of a doom and gloomer from 1993 The last camp is made up of the doom-and-gloomers. Their slogan is "it's the end of the world as we know it". Right now they are convinced that debt is the evil responsible for all our economic woes and must be eliminated at all cost. Many doom-and-gloomers believe that unprecedented debt levels mean that we are on the precipice of a worse crisis than the Great Depression. The doom-and-gloomers hang on the latest series of negative economic data.
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