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Financial Times: Australia to plot ‘superpower’ path

By Virginia Marsh in Sydney
Published: July 18 2006 03:00 | Last updated: July 18 2006 03:00

John Howard yesterday drew attention to Australia’s growing strategic importance, saying the country had the makings of an energy superpower and it was in the world’s interests that it assumed such a role.

“Australia can, and should, supply the domestic and world economies with low-cost energy,” the prime minister told a business gathering in Sydney. “Making the most of a comparative advantage in energy is not just in the national interest. It raises global economic welfare as well.”

Interest in Australia’s vast coal, gas and uranium reserves has risen because of the surge in demand for energy from China and India and, more recently, because of the deteriorating situation in the Middle East and record oil prices. “As anefficient, reliable supplier, Australia has a massive opportunity to increase its share of global energy trade. With the right policies, we have the makings of an energy superpower,” said Mr Howard, a down-to-earth politician who rarely makes bold geopolitical statements.

As recently as five years ago, Australia was dismissed as an “old economy” and its currency fell to an all-time low against the USdollar because of its perceived outdated dependence on commodities.

The country is the world’s largest exporter of coal, accounting for about 30 per cent of world trade in the commodity, has almost 40 per cent of low-cost uranium reserves and is on course to become the second biggest exporter of liquefied natural gas by 2015.

“We are one of only a few net energy exporters in the developed world and ourrelative proximity to rapidly growing energy markets in Asia is an obvious asset,” Mr Howard added.

Australia exports about two-thirds of its energy production, with energy exports expected to reach some A$45bn ($33.9bn) in the present financial year.

Mr Howard – who last month announced an inquiry into Australia’s nuclear energy options – also pledged extra measures to encourage oil and gas exploration, which the industry has pressed for some time. Australia isconsidered relatively unexplored, particularly in frontier offshore areas.

Oil majors such as Chevron and Shell and the local group Woodside Petroleum have already stepped up exploration off northern and western Australia, home to substantial gas fields which have become commercially viable due to the rise in oil prices and technological improvements.

Mr Howard’s speech was long-planned but provided him with an opportunity to reassert his leadership after last week’s damaging stand-off with Peter Costello, his Liberal deputy.

Mr Costello stepped up his campaign to push Mr Howard, who turns 67 next week, into retirement, suggesting the prime minister had reneged on a deal made 12 years ago to hand over to him in a second term.

But Mr Howard, who has been accused of lacking a long-term reform agenda, at the weekend gave his strongest indication yet that he might seek a fifth term as prime minister and used yesterday’s speech to set out his longer term vision for tackling Australia’s water and environmental challenges.

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