Exxon Mobil Corporation (XOM) Jumps Into This Market

Furthermore, the strong Australian dollar and rising labor costs are also not helping. Firms have to continuously reassess their budgets – which in Australia translates into a cost blowout. In Australia seven LNG plants are currently under construction that will start in 2014 or later, of which four projects have recorded significant increase in costs of 15% to 40%. All the while, labor costs have been increasing. And this is not likely to improve for U.S. firms as currency arbitrage will continue to make it more difficult to export profit home. With the Chinese and Aussies now officially settling their trade directly, the CurrencyShares Australian Dollar Trust (NYSEARCA:FXA) will begin to decouple from the U.S. dollar and align itself more directly with the Chinese yuan, which will continue to strengthen versus the dollar.

Oil and gas demand across Southeast Asia is set to double between now and 2030, and development of resources that bypass the need to import energy by ship from the Middle East is a big priority for China and the rest of ASEAN. If the cost structures of these projects become unprofitable for Western firms like Exxon Mobil Corporation (NYSE:XOM) and Shell while the dollar decreases in regional importance as the decade grinds on, do not be at all surprised to see them picked up by the likes of Sinopec and PetroChina.

The article Exxon Dives Into Australian Waters to Produce LNG originally appeared on Fool.com.

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