With new tenants settling into 1600 Pennsylvania Avenue, Australia’s oil and gas industry is bracing itself for increasingly competitive markets, but believes that the incumbent Trump administration and the appointment of Rex Tillerson as secretary of state are good news for the global petroleum business.

“You’ve got a guy [Tillerson] with vast understanding of the oil and gas industry, and that has got to be good for the oil and gas industry, but it is a mixed blessing for the Australian industry,” said Malcolm Roberts, CEO of the Australian Petroleum Production & Exploration Association (APPEA) .

Barely a week after Donald Trump’s inauguration, Australian oil and gas industry captains will keep a cautious eye on potential headwinds emerging from newly sanctioned U.S. LNG export cargoes, barely three months after Australia celebrated a record AU$1.72 billion in exports from 4.3 million tonnes of LNG.

“On the one hand, the signs are that the new administration will support energy development in the U.S., and that is very positive for the energy sector. But it does expose us [Australia] to more risks of seeing more product entering the global market, which could put downward pressure on an already oversupplied market,” Roberts said.

Trump wasted little time resuscitating the Keystone XL Pipeline halted by his predecessor, and Australia will watch closely to see what policy his administration adopts toward climate change and free trade agreements.

“One could say there is likely to be a spike in U.S. exports, which is certain to have an impact on prices and could delay recovery in the sector. But another question is, What remains of climate change and the extent of honoring Paris Accord commitments? It’s probably become a little more uncertain what will happen to a global effort, which is as important an issue for the oil and gas industry as for any part of the energy sector,” Roberts said.

“It is important to have a global effort on climate change and a common commitment to achieving practical emission reductions,” he continued. “And market access is absolutely critical to the Australian economy and a key concern at a time when the global economy is moving ahead reasonably, and it is important to have effective market access.

“Protectionism does not necessarily suit Australia or the industries’ interests, and the oil and gas industry is globally integrated, relying on market access. That’s not to say that protectionism will lead to problems, but whether it becomes a contributing factor towards a less open global trading system … and Australia is very dependent on global access.”

Barry Goldstein, a native of New York and today the executive director for South Australia’s Energy Resources Division, said Trump’s “America first” policy would “inevitably add to supply-side competition.”

“So if we did not already know it, we know it now that productivity in a very competitive market will be essential for Australia to export LNG at the very least,” Goldstein said.

Goldstein added that the world is witnessing exceptional technological advances in unconventional shale technologies, with U.S. operators pushing production costs to $40 and becoming ever competitive on a global scale. These initiatives were recalibrating the balance of power between OPEC and non-OPEC rivals, driving price-cum-market control dynamics.

“From someone who is a U.S. citizen, albeit a decade since I lived there, all I can say is the market is much more competitive and no oil producing player has the market power it once wielded.”

Goldstein said the number of trains being approved or on the drawing board for LNG export in the U.S. had a combined capacity that exceeded forecast demand, which was why the bears were forecasting a buyer’s market for the next five years.

He said robust and adaptable Australian companies, such as Adelaide-based Santos, had reduced the barrels of oil equivalent (boe) production costs from mid-dollar 40s/boe to US$38/boe.

“If we are able to break even at $38, we are heading in the right direction in regard to resilience for any price impact volatilities resulting from the Trump administration’s policies. Australian gas faces the same issues of productivity and being profitable in ever-tightening markets,” he said.

Dale Granger is based in Perth, Australia.