Lack of Gas the Biggest Threat To Australian LNG: EnergyQuest Australian LNG Monthly April 2021

EnergyQuest has just released its Australian LNG Monthly for April 2021. Some of the highlights are:

• Australia’s LNG exports have weathered the pandemic well. Exports last calendar year were 78.3 Mt, up on 77.0 Mt the year before. In its latest annual report, the International Group of LNG Importers (GIIGNL) ranks Australia as the world’s biggest LNG supplier in 2020 with 77.8 Mt imported from Australia by its members, just ahead of Qatar with 77.1 Mt. In the first four months of 2021 Australia has maintained the same level of shipments as last year.

•  The March Department of Industry Resources and Energy Quarterly forecasts that this financial year Australian LNG will still be Australia’s third largest export after coal and iron ore. LNG exports are expected to be worth $32.5 billion, behind iron ore at $114.7 billion and coal (metallurgical and thermal) at $37.6 billion. However, in 2021-2022 LNG, with forecast revenue of $43.7 billion, is forecast to pass coal with $42.5 billion, making it LNG second to iron ore with $114.7 billion.

• So what could go wrong? Lack of gas for LNG projects is a bigger threat to LNG exports than anything China might do. In particular production from the North West Shelf is soon expected to start declining and the same is likely with some of the Queensland projects later this decade.

• The Platts JKM Asian LNG spot price has hit US$10/MMBtu, the highest for this time of year since 2014. This pushes up LNG netback prices for east coast gas.
• NEM power demand rebounded in April. Generation from renewables and coal rose. Gas for power generation was down again compared with April 2020 but less so than in previous months.

• In April Australian projects shipped 6.9 million tonnes (Mt) (99 cargoes), lower than the record 7.2 Mt (105 cargoes) set in March.  The previous record was 7.1 Mt (104 cargoes) in December 2019.

• Australian projects delivered 43 cargoes to China in April, nearly a record, after delivering 29 in March and 40 in April 2020.

• Queensland short-term domestic gas prices in April were higher averaging $6.97/GJ ($6.06/GJ in March) at Wallumbilla and $6.84/GJ ($6.25/GJ) in Brisbane, compared to those in March. Southern short-term domestic gas prices in April were higher compared to those in March averaging $6.66/GJ ($6.18/GJ) in Sydney, $6.92/GJ ($5.88/GJ) in Adelaide and $5.99/GJ ($5.66/GJ) in Victoria.