Alexandra Heath, head of economic analysis at the Reserve Bank of Australia, yesterday set her sights on credit issues surrounding Australia's gas and banking sectors."Geographically, Australia is well positioned to supply LNG to the Asian region, which is expected to drive much of the increase in demand for LNG in coming years," Heath said.Speaking at CEDA's NSW Energy Series: Future energy projects in Sydney, Heath said "the viability of future projects, at least in the short-term, has been challenged by the fact that LNG prices in the Asian market have fallen in line with the price of oil, which is a close substitute, and potential Australian projects are generally considered to be higher cost than competing projects in other countries. "However, the decline in prices is unlikely to lead to a significant reduction in production from existing producers because the high fixed costs of building the infrastructure have been paid and marginal production costs are relatively low. "Ultimately, the outlook for LNG demand in Asia will depend on the availability and price of competing sources (including renewable energy), and the extent to which Asia's natural gas demand translates into demand for LNG (rather than pipeline gas imports or locally produced gas)."Heath concluded: "Technological change is likely to be an important factor in determining the outcome."