Mr Michael Stoppard, Managing Director (Global Gas) of Cambridge Energy Research Associates, reminded Conference delegates in his plenary address that natural gas needed to be considered in a different context to crude oil.

"Natural gas," he said, "requires full chain development from wellhead to final customer. Its trade is linked with bilateral government relations. It is not a globally freely-traded commodity, although this is changing. Natural gas is a long-term relationship business. The chain includes natural monopoly components. Natural gas requires planning and co-operation between multiple parties."

Mr Stoppard said government in Australia had to face four critical policy questions for natural gas:

• How fast does Australia wish to produce its resource base?
• What the correct balance between exporting gas and developing gas-intensive domestic industries?
• How does one determine the value of a commodity that has no clear international price?
• How should it go about setting fiscal terms that are equitable for both the mineral resource owner and the investor.

"What type of LNG market does Australia want?" he asked, arguing that there was a strategic choice for the country on LNG market structure. "Will you follow the existing bilateral contract model with gradual evolution of short-term LNG trading or actively develop short-term LNG trading and hubs?" Whichever direction is chosen, he said, Australia cannot prevent change - it can choose only to accelerate and shape it or simply adapt to it.

Mr Stoppard told delegates that Australia has the opportunity to become a leading global gas player provided that it made a decision about the principal policy driver. "Success," he said, "depends on co-operation between private industry, government and local stakeholders. It also depends on bilateral government relations."

Australia's oil and condensate production has declined every year since 2000, the APPEA Chairman, Mr Eric Streitberg, said in his address to the opening day of the Conference.

Mr Streitberg said that, in trade terms, Australia has gone from a small surplus of $221 million in 2008 to a trade deficit in 2008 for oil and condensate of $6.7 billion, a direct result of the run-off of production in Bass Strait and not enough reserves being found to replace these fields.

The industry has done much better with natural gas, he went on. Australian production totalled just over one trillion cubic feet of gas for domestic consumption in 2008, a seven percent increase over the previous year. Of this, 142 billion cubic feet was from coal seam gas production, a "staggering" 39 percent increase over 2007.

With CSIRO estimating a potential coal seam gas resource in Australian of 250 trillion cubic feet, the future looked very good for CSG production.

Mr Streitberg said LNG production was also strong, totaling 15.7 million tones, a four percent increase over the previous year. Woodside's Pluto project, when it comes on stream late next year, will add another 4.3 million tonnes a year to national output.

Launching APPEA's 2009 "State of the industry" report, Mr Streitberg noted that the twin collapse in the global oil price and the global financial system, with the drying up of credit markets, had led to "drastic budget cuts and cancelling of exploration programs and development projects."

He urged the industry in Australia to take a long-term perspective of employment in this situation. "One unfortunate casualty of this turmoil is people," he said. "Our industry has a sad history of laying off people when the market turns down, but I urge APPEA members - in fact I lay down the challenge - to take a responsible and counter-cyclical view."