AUSTRALIA LNG EXPORTS HEADING FOR 60 MILLION TONNES

Australia’s LNG exports surged by 37.7% to 36.8 million tonnes (Mt) over calendar 2016 as the plethora of new projects in WA, the Northern Territory and coastal Queensland triggered a flood of new shipments to global markets. Total exports were 10.1Mt above the 26.7Mt shipped in 2015.  Performance in 2017 is expected to be even stronger.

In its just-released monthly LNG report, the respected independent energy consultancy, EnergyQuest, says that as APLNG and Gorgon continue to ramp up and new LNG projects come into production (Wheatstone and Ichthys), Australia’s 2017 exports will be close to 60Mt, up by 63% from 2016.

Notwithstanding the lower oil price environment present through much of last year, EnergyQuest estimates the total value of Australian LNG exports as $17.9 billion in 2016. This is an 8.6% dollar increase over the previous year.

Oil prices (to which LNG prices are linked) are now around 25% higher than the 2016 average, reflecting recent decisions by OPEC. If current oil prices are maintained, EnergyQuest estimates that the value of Australian LNG exports will double to around A$36 billion in 2017.

“The growth of LNG exports is a massive benefit to the Australian economy,” EnergyQuest CEO, Dr. Graeme Bethune, said. Australia’s newest LNG hub – the three new plants around Gladstone – not surprisingly saw Queensland LNG exports nearly triple to 17.5Mt in 2016 while west coast exports were down slightly at 19.3Mt for the period. Most Australian LNG exports continued to go to established customers with long-term contracts during the year.

Japan remains the largest customer for Australian LNG, taking 48% of 2016 cargoes. China is now the second-biggest customer, taking 30% of cargoes (60% of cargoes from Queensland). Korea is an emerging buyer (53 cargoes), and 2016 saw regular Australian cargoes to India (16 cargoes). There has been particularly strong demand for LNG in North Asia during the current winter. North Asian LNG spot prices are now the highest in two years.

The Platts JKM marker was US$9.75/MMBtu early in January, which is well above LNG contract prices of around US$7.00/MMBtu. High spot prices are also attracting US LNG cargoes into North Asia.

“Shipments from the Sabine Pass project on the US Gulf Coast, which were mostly going to South America, are now overwhelmingly heading to North Asia with nine of the 12 December loadings heading there,” Dr. Bethune said. “However, this does not appear to be adversely affecting Australian exports, which are also well positioned to take advantage of high spot prices,” Dr. Bethune said.