East Coast gas supply begins to be resolved while staying No. 1 ahead of Qatar
LNG Journal editor
Australian liquefied natural gas production in the third quarter of 2019 represented an annualised rate of 79.5 million tonnes, keeping the nation in the No. 1 spot of global producer, ahead of Qatar's nameplate capacity of 77 MTPA.
The output reached a record 20.0MT in the third quarter, up from 19.3MT in the second quarter and 18.1MT in the same three months a year ago, according to a report from consulting firm EnergyQuest.
“We expect total Australian shipments to be about 82MT in the 2020 fiscal year,” said EnergyQuest.
Following the commissioning earlier in 2019 of the Royal Dutch Shell-operated Prelude FLNG plant offshore northwest Australia, national nameplate liquefaction capacity rose to 87.45 MTPA.
However, EnergyQuest said that the last quarter had seen dramatic declines in international energy prices compared with a year earlier.
“The biggest falls have been in spot LNG and coal but oil has also experienced a significant decline,” it added.
“However, the long-term oil-linked contracts that underwrote Australia's LNG investment boom are still quarantining local producers from a global LNG glut that has taken Asian spot prices to a 10-year low,” explained EnergyQuest.
The Australian LNG price in the third quarter was between US$7.60 per MMBtu and US$8.80 per MMBtu.
During the quarter, the Australian East Coast natural gas market posted its largest surplus since LNG exports began from the three coal-seam-gas-to-LNG plant on Curtis Island near Gladstone in Queensland.
Natural gas production reached a record 500.1 petajoules during the three months with the new Northern Gas Pipeline supplying 6.1 petajoules, and amounting to a total increase in supply of 26.5 petajoules from the previous quarter.
“This is the largest East Coast surplus since the beginning of LNG exports and a dramatically better outcome than in the third quarter of 2018 when there was a deficit,” stated the report.
The LNG plants, Queensland Curtis, the Gladstone and Australia-Pacific LNG supply the main North Asian nations such as China, Japan and South Korea.
Australia-Pacific, operated by ConocoPhillips, ships cargoes to Chinese major Sinopec, which has a 7 million tonnes per annum contract, while the Shell-owned QCLNG delivers many cargoes to southern China.
“Record CSG production allowed Queensland's LNG projects to satisfy political pressure to supply more gas to the domestic East Coast market while modestly increasing gas exports,” explained EnergyQuest.
Short-term east coast gas prices averaged A$8.23 per gigajoule (US$5.32 per million British thermal units), down by 7.8 percent from an average A$8.93 per gigajoule (US$5.77 per MMBtu) in the third quarter last year.
EnergyQuest noted that the Queensland prices were lower than those in the South of Australia and the significant fall in prices was likely to weaken the case for tightening the Australian Domestic Gas Security Mechanism (ADGSM) to guarantee domestic supplies.