The resource service sector headwinds

Founder and Chief Investment Officer of Montgomery Investment Management
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Recently the Bureau of Resources and Energy Economics (BREE) released their biannual Resources and Energy Major Projects report, and it is not good reading if you are a shareholder in a business servicing the Australian resource service sector.

According to BREE the amount of committed project work dedicated to the resources and energy sector has declined by $40 billion, or 15%, to around $230 billion over the past year. I now think this decline is likely to be the tip of the iceberg.

There are some enormous projects, particularly in the energy sector, that are shifting in status from construction to production over the next few years, from which Australia will benefit enormously, with export value of LNG expected to grow fivefold over the next five years to $65 billion.

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