Page 5 - GLNG Week 01

GLNG COMMENTARY GLNG
According to the Australian Petroleum Pro- duction and Exploration Association (APPEA), for Australia to become the world’s leading LNG exporter has required collective investments of more than AUD350bn ($240bn) over the past 10 years. The growth of the industry has also gener- ated 80,000 direct and indirect jobs, according to the group.
EnergyQuest estimates that Australia’s total LNG export revenue for 2019 reached AUD49.0bn ($33.6bn), up from AUD43.3bn ($29.7bn) in 2018 and AUD9.4bn ($6.4bn) in 2010, when the country’s LNG industry first started booming.
The average 2019 LNG export price was AUD11.41 per gigajoule ($205.75 per 1,000 cubic metres), EnergyQuest added, well above Western Australia’s domestic gas prices of below AUD4.00 per gigajoule ($72.00 per 1,000 cubic metres).
The past year saw LNG spot prices falling, but even with the super-chilled fuel being sold at a lower price, these figures suggest that it is still more profitable to sell gas overseas rather than the domestic market, at least for those com- panies that already own existing LNG export infrastructure.
Domestic shortages
Ironically, Australia’s LNG boom comes as the country faces looming domestic shortages of natural gas. Indeed, two gas exporters in Queensland – Royal Dutch Shell and APLNG – have decided to offer more of their gas to the domestic market. Meanwhile, a handful of LNG import projects have also been proposed for the country, though these have encountered a num- ber of obstacles. One major challenge for these ventures has been securing sufficient customer
interest to move forward. Indeed, ExxonMobil scrapped a proposed LNG import project on the Victoria coast in December owing to insuffi- cient customer interest. Earlier, in November, it was reported that Australian Industrial Energy’s (AIE) Port Kembla LNG plan was also struggling to lock in deals with potential buyers.
This comes as gas availability on the domes- tic market had improved, making buyers more hesitant to lock in long-term deals. Indeed, Ener- gyQuest’s Bethune was cited by local media in December as saying that customers were prefer- ring to commit to short-term contracts owing to uncertainty about future price trends and gov- ernment energy policy.
However, the bushfire crisis that currently shows no signs of abating in Australia could have an impact on domestic natural gas demand. Already, the crisis has led to renewed calls to accelerate the phase-out of coal-fired power generation, which still accounts for about 60% of Australia’s electricity, over concerns related to the plants’ contribution to climate change.
Environmental groups remain opposed to LNG developments as well, because of the emissions involved, particularly from meg- aprojects. But the LNG industry has argued that it is cleaner than coal and is helping the world to transition to a lower-emissions future. The industry expects to play a significant role in ensuring stability of supply under conditions that may be unfavourable for renewables. While environmentalists will continue to advocate a move away from fossil fuels altogether, a push to phase out coal could favour the natural gas industry, and spur additional gas demand in Australia. In turn, such demand could result in new gas infrastructure, including LNG import projects, moving forward.™
The largest individual contributors to Australian LNG exports were all projects located in Western Australia.
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