LNG

Global natural gas prices remained flat even as Australian labor unions prepared to have all-out strikes from September 14 at the Gorgon and Wheatstone LNG export plants as mediation talks were still taking place in Perth in Western Australia.

The Australian Government’s quarterly energy review said that the nation’s 2023 liquefied natural gas production was expected to “stabilise” at around 80 million tonnes from about 83MT last year as output from the Pluto LNG Train II expansion offsets falling production from the Northwest Shelf facility.

Both of the liquefaction and export plants are operated in Western Australia by Woodside Energy.

Australia’s previous strong result was driven by record-high utilisation rates at Australia’s West coast plants amidst high international LNG prices.

For example, Wheatstone, Gorgon, and Pluto LNG (one-third of Australia’s total LNG capacity) are estimated to have operated at a combined utilisation rate of 110 percent in 2022.

“The impressive result was enough to offset lost production at Darwin LNG due to field depletion in the Bayu-Undan basin and at Prelude LNG, which experienced unplanned outages throughout the year,” explained the report from the Office of the Chief Economist in Australia

It added that Australian LNG export revenues were forecast to reach A$91 billion (US$60.67Bln) in 2022-2023, on higher global energy prices and a lower Australian dollar.

“As global energy markets reorganise, earnings are forecast to fall steadily (in real terms) - to A$45 billion by 2027-2028,” said the report.

The report noted that global LNG trade increased by 5.5 percent last year to an estimated 395MT.

Europe's role

“Europe has now emerged as the key driver of import growth and is forecast to maintain this position across the outlook period. Rising European demand will likely come at the expense of Asian consumption, which is typically more price sensitive,” said the report.

“Throughout 2022, many Asian buyers were priced out of the market by European importers. Other buyers, mainly in China, appear to have resold their contracted US cargoes to European markets to arbitrage the higher European prices,” it explained.

“Remarkably, record-warm winter temperatures and a steady flow of LNG imports from the US, has seen European storage reach its highest levels in recent history, alleviating the risk of an immediate gas shortfall and easing pressure on LNG prices,” said the report.

However, the view from Canberra is that global gas markets are forecast to remain “tight and volatile” until the end of 2024 as Europe continues using LNG to compensate for lost Russian pipeline gas.

The tight supply conditions are then forecast to ease in 2025 and 2026, as new US and Qatari liquefaction facilities come on stream.

East Europe

“The steady flow of US LNG and record-high winter temperatures reduced the drawdown of European storage inventories over the 2022-23 winter,” said the report.

“These two conditions eliminated the risk of an immediate shortage and have improved the likelihood of healthy storage injections over the 2023 refilling period,” it added.

Europe is now forecast to capture most of the world’s growing LNG supply over the outlook period.

European LNG imports are forecast to reach 142MT in 2023, double the figure in 2021 as Germany, Belgium, Italy and Greece commission new LNG import facilities to offset lost Russian pipeline gas.

Imports are also projected to rise to 178MT by 2028, as new pipeline interconnectors in the Czech Republic, Bulgaria and Slovakia allow LNG importing countries to export gas to Eastern and Central European markets.

Australian LNG exports reached a new record of 81.4 million tonnes in 2022 and the export revenue increased by 86 percent year-on-year to A$92.8 billion (US$63.4Bln) in the 12 months to the end of December because of much higher prices and Australia appeared to tie in volume terms as World No. 1 exporter along with Qatar and the US.

Venice Energy, the group planning a project to import LNG into South Australia, said it signed a project agreement with Flinders Ports that sets out the framework to support the development of the floating facility in Port Adelaide.

A concept design has been agreed by both companies that would guide the development of two new operating berths as well as associated onshore facilities at Outer Harbor, subject to development approval.

Venice Energy said its LNG import facility would enhance the supply of gas to South Australian domestic and industrial users.

Managing Director of Venice Energy, Kym Winter-Dewhirst, said the terminal would bring significant benefits to the state.

“Importing LNG into South Australia will improve and diversify local gas supplies, especially during peak periods and help to underpin South Australia’s globally leading renewables sector by providing firm despatchable energy at times when wind and solar are not operating,” explained Winter-Dewhirst.

“It will also increase the State’s energy security and enable downward pressure on gas prices for all users,” he added.

“Our proposed facility is expected to bring around 80 petajoules per annum (2.14 billion cubic metres) of natural gas into South Australia and with supplies forecast to tighten in just a few years’ time, importing LNG makes sense,” he stated.

The proposed facility would be located adjacent to the Pelican Point gas fired power station next to the already productive Flinders Ports quay line.

Subject to various approvals and other issues set out in the project agreement with Flinders Ports, the facility is expected to be operational by 2022.

At least two other Australian LNG import projects are progressing, including one by billionaire businessman Andrew Forrest's Squadron Energy in New South Wales at Port Kembla, south of Sydney.

A second Australian LNG import project is proposed at Crib Point at the Port of Hastings in the state of Victoria by AGL Energy.

Australia, while being the world's largest LNG exporter, is moving to LNG imports in southeast Australia because of natural gas shortages for industrial and domestic retail supplies.

Santos, the Australian operator of the Gladstone liquefied natural gas plant in Queensland and a stakeholder in export plants in Darwin and Papua New Guinea, posted record quarterly LNG revenue as its annual income from the fuel jumped more than 23 percent and a total of 232 cargoes departed from the three facilities.

Santos said in its quarterly activities report that total LNG sales revenue for 2018 amounted to US$1.45 billion versus US$1.17Bln in 2017.

Record overall quarterly sales revenue, including oil and other products, rose by 7 percent to US$1.04Bl, including record quarterly LNG sales revenue of US$449 million, up 39 percent compared with the US$323M reported in the same 2017 quarter and 11 percent on the previous quarter’s US$405M.

The company said its annual realised LNG price was US$9.91 per million British thermal units compared with US$7.31 per MMBtu in 2017.

Fourth-quarter LNG volumes were sold at an average of US$10.96 per MMBtu versus $US10.43 in the previous quarter.

Fourth-quarter production of all products was higher than the prior quarter due primarily to the completion of the of acquisition of Australian company Quadrant Energy on November 27, partially offset by completion of the sale of Santos’s non-core Asian asset portfolio in September 2018.

Quarterly LNG cargoes shipped from Gladstone LNG on Curtis Island, whose other shareholders are Petronas of Malaysia, France’s Total and Korea Gas Corp., amounted to 20 cargoes and 80 shipments for the year compared with 89 in 2017.

“LNG production was lower than the prior year primarily due to the GLNG joint venture partners diverting about 40 PJ of gas (1 billion cubic metres) to the domestic market,” said Adelaide-based Santos.

“The diverted gas, originally slated for export cargoes and equivalent to 700,000 tonnes of LNG, was sold to East Coast domestic customers,” added the company.

Santos also noted that a record 305 coal-seam gas wells were drilled for GLNG in 2018, up 77 percent from the previous year and the wells are likely to number 350-400 in 2019.

Quarterly LNG cargoes shipped from PNG LNG, operated by US major ExxonMobil, amounted to 30 in the last three months of the year and 98 for all of 2018. The number of PNG shipments that departed in 2017 was 110.

“The LNG plant operated at an annualised rate of 8.7 million tonnes per annum during the fourth quarter and achieved daily rates in excess of 9 MTPA annualised.

Annual production in 2018 was, however, lower than the prior year primarily due to the impact of a severe earthquake in the first half,” Santos explained.

“Santos along with the other PNG LNG parties and the Papua LNG Joint Venture are also continuing discussions to build alignment for the proposed construction of three additional LNG Trains at the PNG LNG site, with two Trains to process gas from the Papua LNG project and one Train for the proposed PNG LNG expansion,” added the company.

The Darwin LNG plant, operated in the Northern Territory by ConocoPhillips, shipped 16 cargoes in the quarter and 54 for the year, mainly to Japanese customers.

Santos said that as regards Darwin LNG, detailed engineering design for the offshore Barossa gas development is being advanced across a number of fronts with a final investment decision targeted towards the end of 2019.

“The successful development of Barossa would extend the operating life of Darwin LNG for more than 20 years,” stated Santos.

Trelleborg of Sweden has announced a partnership with leading Australian engineering consultancy Synertec to meet growing demand for more accurate and efficient LNG custody transfer measurements.

Chevron Corp., the operator of the Gorgon LNG export plant on Barrow Island in Western Australia, is proceeding with the second stage of upstream development for 11 new feed-gas wells in the prolific offshore fields.

April 10 (LNGJ) - The 161,880 cubic metres capacity carrier “BW Pavilion Vanda”, operated by Singapore-based BW Gas, is scheduled to deliver a cargo on April 13 to the Chinese Qingdao import terminal from Gladstone LNG in Queensland, eastern Australia, according to shipping data. The 172,000 cubic metres capacity vessel “Beidou Star” will unload a shipment on April 13 at the Indian Dahej terminal from Gorgon LNG on Barrow Island in Western Australia. The 160,000 cubic metres capacity carrier “Asia Endeavour” has arrived at the Wheatstone LNG export plant at Ashburton in Western Australia, operated by Chevron Corp., to lift a cargo for Asia. The 152,300 cubic metres capacity carrier “Seri Begawan” is due to arrive on April 13 at the Gladstone LNG export plant in Queensland, in eastern Australia to lift a cargo after previously delivering to Japan. The 153,000 cubic metres capacity vessel “LNG Barka” is scheduled to arrive on April 23 at the Gorgon export plant in Western Australia to load a shipment.