China takes 40 Australia cargoes to be top customer in Asia for now ahead of Japan

Tuesday, 19 May 2020
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LNG Journal editor

China has temporarily become the biggest buyer of Australian LNG as 40 cargoes were delivered last month, overtaking previous top destination Japan.

The Australian deliveries to Chinese terminals were much higher than the 29 shipments logged in March and the 36 cargoes in April 2019, according to Australian consultants EnergyQuest.

Full throttle

“Unlike the situation in the US, it seems unlikely that there will be Trains shut-in or major output cuts from Australian projects due to lower oil and LNG prices,” said the EnergyQuest monthly report.

Australian projects shipped 6.9 million tonnes, or 101 cargoes, last month overall, marginally higher than the 6.8MT in March, and more than the 6.7MT in April 2019.

Thirty-six deliveries were made to Japan in April, well down on 46 delivered in March and similar to the 33 delivered in April 2019.

Australia also shipped 10 cargoes to South Korea in April, up on the deliveries of last year when seven cargoes were delivered.

“Australia moved to top spot as the largest supplier to Korea in March, just ahead of Qatar. Malaysia moved onto third spot with the US well behind,” said EnergyQuest.

The nation's April shipments were 84.2 MTPA on an annualised basis.

Average LNG plant capacity utilisation was up in April despite the continued shutdown of Prelude, the Shell FLNG plant offshore northwest Australia.

“Most Australian LNG is sold under long-term oil-linked contracts and oil prices would need to remain very low for a considerable period for there to be shut-ins,” stated the report.

“Indications are that west coast LNG projects are cash flow positive at oil prices above about US$15/bbl and east coast projects above US$25/bbl,” EnergyQuest explained.

The largest Australia exporter, Woodside Petroleum, operator of the North West Shelf plant in Western Australia and the nearby Pluto LNG, said it had no plans to cut LNG production and shipments are typically based on 12-month schedules.

EnergyQuest noted, however, that there were likely to be fewer spot cargoes at current prices.

In April there were no spot cargoes from the North West Shelf or the Chevron-operated Gorgon plant on Western Australia’s Barrow Island.

“Spot deals from other projects were at very low prices. One cargo from Wheatstone was sold at at US$1.80-1.90/MMBtu and two cargoes from Ichthys (Inpex operated) and one cargo from Darwin (ConocoPhillips), were all believed to have been at around US$1.70-1.75/MMBtu.

The Darwin cargo was originally scheduled for delivery to a Japanese customer but was deferred.

The Australian report added that scheduled maintenance programes at the NWS plant and Gorgon had been pushed back due to the Covid-19 restrictions.

On the East Coast there was one spot cargo from Australia-Pacific LNG and one spot cargo from Petronas of Malaysia from Gladstone LNG because of cancellation by a buyer.

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