Oil production, however, is expected to continue to slide after slumping to a 40-year low in 2017

        In his latest research report, the CEO of Australian consulting firm EnergyQuest said that investment confidence is returning with the country’s oil and gas “production at record levels and growth back on the agenda.”

        Thanks to surging prices, Bethune said he expects Australia’s liquefied natural gas (LNG) export revenue to surge 42.5% from 2016 to US$25.5 billion for 2017. According to Platts, the LNG spot price in Asia rose to its highest level in nearly three years to close above US$10 per million Btu in early December. Strong demand from China and India, and supply tightness in the Middle East underpinned LNG’s strong recovery over the past few months.

        Oil prices have also been rebounding, with Brent crude rising above US$65 a barrel in early December.

        “Exploration activity (in Australia) is picking up strongly, which is a clear leading indicator of the industry’s health,” said Bethune.

        “Investors sentiment has swung behind the petroleum sector, reflected in a surge in capital raisings and initial public offerings.”

        But the recovery has not been sufficient to reverse Australia’s declining oil production.

        Bethune observed that the decline “passed an historic milestone in the third quarter when (crude oil) output slipped below condensate production.”

        In an earlier research report, Bethune wrote that Australia’s oil output had fallen to the lowest level in more than 40 years at just 140,000 barrels of oil per day (b/d) in FY 2017.”

        “This decline and the well-documented shortfall in our oil security arrangements makes Australia particularly vulnerable to disruptions to shipping routes from refineries in Singapore, Korea and Japan.”

        On the other hand, the country’s LNG production increased by 20.5% quarter-on-quarter to a record 14.6 million metric tonnes in the July-September period.

        For the financial year to June 30 2017, Bethune said Australia produced a combined record 767 million barrels of oil equivalent (MMboe) of hydrocarbons, up 19.5% from the previous year.

        The 38.7% increase in LNG production more than offset the 24% decline in crude oil output. For FY2017, Australia produced 51.5 million metric tonnes of LNG and around 140,000 b/d crude oil.

        Australia’s Department of Industry, Innovation and Science said the country’s oil production declined partly on account of weather-related shut-downs in the North West Shelf and Pluto fields along with industrial action in the lower Gippsland Basin field earlier in the year.

        But thanks to rising prices, the department expects Australia’s earnings from crude oil and condensate exports to grow by seven percent to A$6 billion in the current fiscal year to June 2018, and to climb further to A$8.1 billion the following year. (US$1=A$1.3).