The Australian view of the global natural gas and LNG markets has been updated since the Ukraine crisis and is seen as not only affecting Europe but has altered forecasts and aims in the whole Asia-Pacific region as well.
“Not only is Russia the biggest gas supplier to Europe, it is now the world’s fourth-largest LNG producer, with more than half Russian LNG going to Asia, where Japan is the biggest Russian customer,” said the recently updated report from Adelaide-based consultants EnergyQuest.
“At the same time that Japan’s LNG imports from Russia are under a cloud, Australian supplies to Japan are under threat from the looming cessation of gas from Bayu-Undan for Darwin LNG, the decline of the North West Shelf and the problems with Prelude,” said the report.
These are references to the Bayu-Undan gas field in the Timor Sea and which is near depletion as a supplier to the Darwin liquefaction plant, while problems continue with Shell’s Prelude floating production hull offshore northwest Australia.
“The end of Bayu-Undan also means the end of Timor-Leste’s major revenue-producing asset,” said EnergyQuest.
It noted that with the European crisis, the demand for Australian LNG is likely now to be even greater, which is an opportunity to win more contracts for current new projects.
Aims and priorities
“Woodside should be able to contract more of Scarborough and Santos more of Barossa,” said the report in reference to separate new LNG projects planned by Perth-based Woodside Petroleum and Adelaide-based Santos .
“The second priority would be to keep existing plants full, particularly the North West Shelf in the face of its looming decline,” it added.
A third priority raised by the report was that of brownfield expansions to existing Australian projects but they would need to be able to demonstrate links to net-zero aims.
“New Australian greenfield projects are unlikely. We already have 10 LNG projects and brownfield expansions would be the most cost effective,” explained the report.
The report noted that the Western Australia Browse project has already had three attempts at development and none succeeded so the emergence of a new Browse venture was seen as “pretty unlikely”.
PNG hopes
“Papua LNG in Papua New Guinea is probably the most likely new project in the neighbourhood. It would be great for Timor-Leste if Sunrise (a project once studied by Woodside) could be developed but it has challenges,” added EnergyQuest.
The consultancy also mentioned key Australian statistics from 2021 on production in the various states.
LNG production increased in Western Australia and Queensland while domestic natural gas output decreased in all regions and national oil production decreased “significantly” in 2021.
“However, national condensate production in 2021 increased by 5.8 percent year-on-year to a record level of 93.4 million barrels thanks to record production from Prelude, Ichthys and Wheatstone and high levels of output from the NWS and Gorgon,” stated the report.
