The recent awarding of the $50 billion submarine contract to French firm DCNS was greeted enthusiastically by members of the French-Australian Chamber of Commerce and Industry (FACCI), which is doing terrific things around town and running some excellent events. For example, the week before last, at a FACCI breakfast event at Deloitte’s offices, Australia Pacific LNG CEO Page Maxson, the quintessential oil and gas man from Oklahoma, spoke about issues affecting the LNG industry. Despite recent market conditions, Mr Maxson was very upbeat about the outlook for gas over the next five to ten years. Given expected global demand growth, analysis he has seen suggests there will be a shortage of capacity within six years, and he also noted that six years is about the full lead time needed to increase capacity.
Mr Maxson was realistic enough to recognise that, over the long-term, there will be (or has to be) a transition away from fossil fuels to other energy sources. He considered that the only realistic way to do this, and come anywhere near achieving the aspirations set at the Paris Climate Change Conference, would be to massively increase our reliance on nuclear energy. I fear Mr Maxson is right about this. A greater reliance on nuclear energy may bring large risks, but it may well be preferable to relying on very costly renewable energy.
In question time, Mr Maxson was asked whether Australia is a high-cost country and whether this is adversely impacting the industry. Mr Maxson noted that the problem is not high wages, but rather relatively low productivity for those wages. He compared us with Japan, which has high wages but also high productivity in its industrial sectors, which he considered is related to better organisational skills in Japan than he sees in Australia. Of course, it is well known that Japanese success in manufacturing is partly related to lean manufacturing/just-in-time methods that eliminate waste and excess capacity. Mr Maxson’s opinion seems reasonable, particularly given many Australians still possess the “she’ll be right, mate” view and may not pay enough attention to the details. This is certainly something for our educational professionals to ponder, as we may need to teach better organisational and planning skills in our schools.
Page Maxson, CEO of APLNG, addressing a FACCI seminar at Deloitte’s offices, Riverside Centre, Brisbane, on Thursday 28 April. I am in the front row.