LNG

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.

The US Department of Energy has just published its latest liquefied natural gas export data illustrating the price differences and proportion of spot cargoes as well as other details of shipments from the five liquefaction plants in operation.