Australia’s left-wing government issues new natural gas exploration permits to avert crisis but piles on restrictions
Australia’s left-wing government has rowed back from starting to ban hydrocarbons and putting the nation on a path to economic and energy suicide by on July 23 deciding to issue exploration and production licences for natural gas for the East, Southeast and West coast markets.
Australian gas warning
July 5 (LNGJ) - The Australian Competition and Consumer Commission (ACCC) has issued a warning to the nation on East Coast natural gas supplies and the trend for LNG exports. “The long-term supply outlook for gas makes shortfalls possible from 2027,” said the report.
“The East Coast gas market may experience gas supply shortfalls as early as 2027 unless new sources of supply are made available. The potential emergence of supply shortages is one year earlier than previously reported,” the ACCC warned. The short-term outlook concluded that there was “sufficient gas” for the fourth-quarter of 2024 and early 2025. “There is expected to be enough gas to meet East Coast demand, even if all un-contracted gas of LNG producers is exported,” the report added.
Origin Energy takeover by North American funds EIG of US and Canada’s Brookfield faces delays on several fronts
Australian regulators and constantly shifting government energy policies are causing extensive delays that endanger the completion of the A$18.7 billion (US$12.25Bln) takeover of Origin Energy by a North American consortium of investment funds and with a resultant side-deal also giving Saudi Aramco access for the first time to the liquefied natural gas sector.
Australian regulatory body approves EIG unit’s acquisition of Origin Energy that will see Saudi entry to LNG
The Australian regulatory and competition watchdog has waved through the A$18.7 billion (US$11.9Bln) buyout of Origin Energy by a North American consortium and with a resultant side-deal also giving Saudi Aramco access for the first time to the liquefied natural gas sector.
Port Kembla LNG plant could alleviate Australia’s gas shortage
Australian gas customers could be shielded from future shortages on the east coast by bringing gas directly into New south Wales (NSW) via the soon to be completed Port Kembla Energy Terminal (PKET), developer Squadron Energy claimed.
LNG exporter Australia warned by regulator that domestic gas supply crisis is more severe than forecast
One of Australia’s leading energy market regulators has said that the events in Ukraine had pushed global energy markets further into the unknown and that gas supply problems for Europe could get much worse and LNG exporter Australia is also on course for severe gas shortages.
Australia regulator will not oppose US$30Bln takeover by London Stock Exchange of data firm Refinitiv
The Australian Competition and Consumer Commission said it would not oppose the proposed acquisition of Refinitiv Parent Limited (Refinitiv), the analytics and data firm covering financial and energy markets, by the London Stock Exchange Group in a £24 billion (US$31Bln) deal.
Australia becoming Asia spot LNG price-maker amid record exports and high domestic consumption level
Australia exported a record 79.1 million tonnes of LNG in the 12 months to June 2020, up 5.9 percent from 74.7MT a year earlier while domestic gas consumption grew on both the East and West coast markets in the second quarter in contrast to the experience during Covid-19 across most of the developed world.
Australian domestic gas consumption on the East Coast was 7.7 petajoules higher quarter over quarter in the second three months of the year, according to the monthly report from consultants EnergyQuest.
“Gas-use-for-power (GPG) was down by 5.9 petajoules in the quarter, though other gas-use (residential, commercial and industrial) increased by 13.6 petajoules with increases in all states except New South Wales,” said the report.
EnergyQuest noted that as one of the world’s major LNG producers Australia is to some extent becoming a price-maker
in relation to spot prices.
The Platts Japan-Korea Marker has increased from US$2.15 per million British thermal units at the start of July to US$4.66 per MMBtu on 4 September.
“This coincides with unexpected outages at the Western Australian Gorgon LNG project due to the shut-downs for repairs,” said the report.
The national regulator, the Australian Competition and Consumer Commission publishes East Coast netback gas price estimates based on the Platts JKM.
This means that unexpected developments in Western Australia that affect spot prices will directly feed in to East Coast netback
estimates and possibly East Coast prices.
“To this degree any domestic contracts indexed to LNG spot prices will be hostage to unexpected shutdowns by West Coast projects, as well as projects elsewhere in the world,” EnergyQuest explained.
The overall Australian LNG export market followed the rest of the world on the score that towards the end of the year the industry began to buckle under the weight of a global glut of the fuel.
Production of LNG in the second quarter of 2020 fell to 19.1MT, the lowest since the third quarter of 2018.
In July. Australian projects shipped a total of 5.8MT (85 cargoes), only marginally lower than 5.9MT (85 cargoes) in June, but well below the record level of 7.0MT in December 2019.
“From May onwards, the effects of Covid-19 on Australian LNG (in an already oversupplied LNG market) began to hit home,” said the report..
“Projects began extending maintenance periods to rein in production and experienced cargo deferrals. Of the 85 Australian cargoes shipped during June, 33 cargoes were delayed during the month,” it added.
The immediate impact on LNG price realisations was mixed.
Producers such as Woodside Petroleum, operator of the North West Shelf and Pluto LNG export plants, with a relatively high proportion of spot cargo sales, felt the biggest price impact.
However, the East Coast Australia-Pacific LNG facility and the Santos-run Gladstone LNG saw out the full year to end-June 2020 with little deterioration in realized prices.
Total export revenue for the year to June was A$47.8 billion (US$34.8Bln), down only 3.8 percent from a year earlier.
However, the negative impact on prices and revenues was accelerating thereafter.
Export revenue in the second quarter of A$10.5 billion was down 16.1 percent from $12.6 billion in first quarter.
“Queensland’s LNG projects finished the financial year strongly. All three projects shipped record tonnages in FY 2020,” said the report.
“Queensland LNG export revenues were steady at A$4.16 billion between Q2 2019 and Q2 2020 and up slightly from the first quarter. However, revenues are likely to have turned down from July,” it added.
The latest round of quarterly reports by Australian oil producers laid bare the full effect of the pandemic-led collapse in oil prices.
Realised oil prices for Woodside Petroleum, which emerged in Q2 2020 as the country’s largest oil producer, plunged to US$31 per barrel in the second quarter of 2020, down 55 percent from US$69 per barrel in the same period of 2019.
“The latest price was also down sharply from Woodside’s average realised price of US$52 per barrel in the first quarter of 2020,” said the report.
“The country’s second and third largest oil producers, Beach Energy and Santos, suffered a similar fate to Woodside,” it added.
Australian inquiry urges timely investment by LNG producers in resources and infrastructure
Australia has released an interim report as part of its Gas Inquiry and says that concern about prices in the East Coast market could be alleviated if there was more investment by LNG producers in resource development and key infrastructure.
