Aussie Risks and Opportunities

Here’s a little-known fun fact about Australia: it’s is a major exporter of oil and gas.   Its vast gas reserves of 3.8 million cubic meters place it 10th in the world (Wikipedia sez so), ahead of such hydrocarbon luminaries as Iraq, UAE, Kuwait, Lybia and Norway.  Its proven oil reserves aren’t too shabby either.

Another fun fact: Australia has more insanely poisonous critters, snakes and insects that any other place on earth.  Set aside saltwater crocodiles and white sharks.  While crazy dangerous  in their own right, they can be avoided by the simple expedient of staying out of the water.  But evil creatures like the funnel web spider are another matter entirely.  Not only does it look scary enough to cause pants-area mishaps, it likes to hide in your shrubberies.  One milligram of its venom is poison enough for a dozen junior politicians – although not a Boss-level politician like Dick Cheney or Hillary Clinton.  For the likes of them,  recommend a full dart of box jellyfish and blue octopus venom.

Scarier than Freddy Krueger, Jason and Chucky rolled up into one:  A Sydney funnel web spider

Scarier than Freddy Krueger, Jason and Chucky rolled up into one: A Sydney funnel web spider

Its gas fields feed massive LNG developments such as Gorgon, Wheatstone and Pluto projects.  There are other giant gas projects now in construction phase, like INPEX’s Ichthys project, that will add to Australia’s export capacity.  That’s the nice thing about being an Anglosphere country, with solid rule of law and a friendly investment atmosphere:  capital migrates to where it’s treated best.  If you’re a major multinational company (like Apache or ConocoPhillips or Shell), plunking down billions in Australia is a safer bet than say, Russia or Indonesia.

The reference is of course to the nationalization foolishness that occurred in countries like Venezuela, Argentina, and yes, Russia. While major oil and gas corporations aren’t exactly known for saintly behavior in places like Nigeria (don’t look up, Shell, we’re talking about you), the basic expectation is that a major capital investment in an oil and gas infrastructure project will yield a return and be eventually paid back. Smack capital around, and it won’t come back.

So, Australia looks to be a safe bet.  Australian major companies like Woodside, Santos and BHP Billiton are solid dividend players, cranking out a sweet yield quarter after quarter.

Investing consensus holds that Australia will continue to draw investment capital for its oil and gas projects.  So what’s an investor to do?

One could opt for a country-specific ETF or mutual fund, it’s true. For yours truly, I have to be satisfied with ConocoPhillips, local Oklahoma boys who have more than a few projects down under.   A few dividend-yielding shares of COP are tucked away in the 401(k).   For other folks down under with a yen for investing in local homegrown Aussie companies, there is a long list to choose from:  Beach Energy, Origin Energy, Santos, Tap Oil, and last but certainly not least, Woodside.  Do your due diligence, skip the full service brokers and instead buy Australian shares online.

Speaking of risks and opportunities, if you’re unemployed or underemployed, but have some practical skills and can beg or borrow a plane ticket to Oz, it might be worth it.  Skilled and/or competent labor is in short supply in Australia, especially the western part.  If you’ve got a bit of drive and initiative, this could be your chance. Remember, there’s only 22.68 million people down there.  And about a gajillion venomous spiders.  You takes your chances…


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  1. Thanks! Interesting and thought provoking post

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