Australia Oil and Gas Upstream Market Outlook

According to industry insights, the Australia oil and gas upstream market attained a value of USD 34.35 billion in 2025. Supported by ongoing investments in exploration and production (E&P) activities, technological advancements, and rising energy demand across domestic and export markets, the market is projected to grow at a CAGR of 2.00% between 2026 and 2035, reaching a value of approximately USD 41.87 billion by 2035.

The upstream segment of the oil and gas industry focuses on exploration, drilling, and production of crude oil and natural gas. Australia holds significant hydrocarbon reserves, particularly offshore, making it a key player in the Asia-Pacific energy landscape. The country’s vast natural gas resources, especially in basins such as Carnarvon, Browse, and Bonaparte, have positioned Australia as one of the world’s leading liquefied natural gas (LNG) exporters.

With increasing global energy consumption and a strong focus on energy security in the region, the Australia oil and gas upstream market continues to attract investments from major international and domestic energy companies. Despite the global energy transition, hydrocarbons remain a critical component of Australia’s energy mix and export economy.

Australia Oil and Gas Upstream Market Trends

Several notable trends are shaping the Australia oil and gas upstream market. One of the key developments is the growing focus on offshore exploration and deepwater drilling projects. Australia’s offshore fields account for a significant share of total hydrocarbon production, driven by abundant natural gas reserves and large-scale LNG projects.

Another major trend is the adoption of advanced digital technologies, including artificial intelligence (AI), big data analytics, and automation in exploration and production processes. These technologies enhance reservoir management, improve drilling efficiency, and reduce operational costs, enabling companies to optimise production from mature fields.

Additionally, there is an increasing emphasis on sustainability and emissions reduction within upstream operations. Energy companies are investing in carbon capture and storage (CCS) technologies, methane leakage reduction strategies, and cleaner production methods to align with Australia’s climate goals and regulatory frameworks.

The shift towards gas as a transition fuel is also influencing upstream investments. Natural gas is considered a lower-emission alternative to coal, driving increased exploration and development of gas fields across the country.

Drivers of Growth

The steady expansion of the Australia oil and gas upstream market is supported by multiple growth drivers. One of the primary factors is the strong demand for natural gas in both domestic and international markets. Australia is a major LNG exporter to countries such as China, Japan, and South Korea, where natural gas plays a vital role in energy generation and industrial processes.

Rising population growth and industrial activity within Australia are further contributing to increased energy consumption, supporting upstream production. The government’s focus on ensuring long-term energy security has also encouraged investments in new exploration projects and the development of existing reserves.

Technological advancements have significantly improved drilling success rates and resource recovery, making previously uneconomical fields viable for production. Innovations in seismic imaging, horizontal drilling, and enhanced oil recovery (EOR) techniques have increased output efficiency and extended the life of mature assets.

Furthermore, favourable regulatory frameworks and supportive government policies have played a crucial role in encouraging upstream investments. Australia’s stable political environment and transparent licensing systems provide confidence to domestic and foreign investors.

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Industry Analysis

The Australia oil and gas upstream industry is characterised by the presence of major international oil companies, national energy firms, and independent exploration companies. Key players operate across both onshore and offshore basins, with a strong focus on natural gas production.

Offshore projects dominate the upstream sector, accounting for a large share of total production value. Major LNG developments such as Gorgon, Wheatstone, and Ichthys have transformed Australia into a global energy hub. These large-scale projects involve substantial capital investment and advanced engineering capabilities.

Onshore exploration activities are primarily concentrated in regions such as the Cooper Basin and Surat Basin, which contain both conventional and unconventional resources, including coal seam gas (CSG). CSG production has been particularly significant in Queensland, contributing to LNG feedstock supplies.

The industry is highly capital-intensive and technologically advanced, requiring continuous investments in infrastructure, drilling equipment, and environmental compliance. Strategic partnerships and joint ventures are common, enabling companies to share financial risks and technical expertise.

Australia Oil and Gas Upstream Market Segmentation

The market can be divided based on type, Drilling Technology, Production Site, End Use and region.

Market Breakup by Type

• Oil and Gas Wells Drilling Services
• Crude Oil
• Oil and Gas Supporting Activities
• Natural Gas

Market Breakup by Drilling Technology

• Unconventional
• Horizontal Drilling
• Others
• Conventional
• Vertical Drilling
• Others

Market Breakup by Production Site

• Offshore
• Onshore

Market Breakup by End Use

• Natural Gas Extraction Comprises
• Crude Petroleum Comprises

Market Breakup by Region

• New South Wales
• Victoria
• Queensland
• Western Australia
• Australian Capital Territory
• Others

Competitive Landscape

Some of the major players explored in the report by  Expert Market Research are as follows:

• Chevron Australia Pty Ltd.  
• Shell Australia Pty Limited   
• BP Australia Pty Limited 
• Origin Energy Limited   
• ExxonMobil Australia Pty Ltd.  
• Woodside Energy Group Limited   
• Santos Ltd.   
• Beach Energy Limited   
• INPEX Corporation   
• Others

Challenges and Opportunities

Despite positive growth prospects, the Australia oil and gas upstream market faces several challenges. One of the main concerns is fluctuating global oil and gas prices, which directly impact investment decisions and project profitability. Volatile market conditions can delay exploration projects and reduce capital expenditure.

Environmental regulations and growing public scrutiny over fossil fuel projects also pose challenges. Increasing pressure to reduce greenhouse gas emissions has led to stricter regulatory requirements, potentially raising operational costs for upstream companies.

Another challenge is the depletion of mature fields, which requires continuous exploration to replace reserves and maintain production levels. Exploration activities involve high risks and significant financial investments with uncertain outcomes.

However, these challenges are accompanied by substantial opportunities. The continued global demand for LNG presents strong export potential for Australia. Emerging markets in Asia are expected to increase natural gas consumption, supporting long-term upstream investments.

Australia Oil and Gas Upstream Market Forecast

The Australia oil and gas upstream market is expected to witness steady growth over the forecast period from 2026 to 2035. Starting from a valuation of USD 34.35 billion in 2025, the market is projected to reach approximately USD 41.87 billion by 2035, growing at a CAGR of 2.00%.

Natural gas production is anticipated to remain the dominant segment, driven by expanding LNG export capacity and rising domestic consumption. Offshore exploration and development activities will continue to account for a significant share of investments, supported by large untapped reserves.

Technological innovation is expected to play a vital role in improving operational efficiency and cost management. Companies focusing on digital transformation and sustainable practices are likely to gain a competitive edge.

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