Page 4 - GLNG Week 10 2023

GLNG COMMENTARY GLNG

Australian LNG terminals export

less in February as fears grow over

short-term market intervention

Australia marked a banner year for LNG exports in 2022.

AUSTRALIA AUSTRALIA marked a banner year for liquefied well as increased heating needs. Amid this back-
natural gas (LNG) exports in 2022 as the coun- drop, the Australian government has sought to
WHAT: try was the global leader shipping 10.7bn cubic make reforms to the Australian Domestic Gas
Australia’s three East feet (303mn cubic metres) per day of the super- Security Mechanism (ADGSM) to grant the
Coast LNG projects chilled fuel, nipping the US which exported 10.6 government control of the export of LNG every
reported lower exports, bcf (300 mcm) per day and Qatar, which sent quarter in order to guarantee local supply needs
down 3.1% year on year 10.5 bcf (297 mcm) per day abroad last year. are met.
in February. It set a new record for exports for Australia as First adopted in 2017, the ADGSM was
LNG facilities operated at 92% of the nameplate introduced to ensure the country avoids supply
WHY: capacity of 88.6mn tonnes per year (tpy). shortfalls of LNG on its industrial East Coast.
Domestic demand for But after such a strong year, Australia looks The proposed reforms, which are due to take
LNG has risen due to to be on a path towards taking a step back in effect on April 1, would mean that LNG produc-
coal-fired plant outages LNG exports in 2023. Both in output in the ers would need to acquire permission to export
and greater heating early months of the year and in emerging leg- gas during any quarter that is predicted to have a
requirements. Seeking islation, signs appear to be indicating Australia shortage of gas supply.
to secure local supply will relinquish its position as the world’s largest The proposed revisions would also give the
needs, the government is LNG exporter. government the ability to impose LNG export
considering a policy that LNG exports from three East Coast projects, restrictions until 2030. The ADGSM also
would allow it to control namely Australia Pacific LNG (APLNG), Glad- includes that the Minister for Resources would
LNG exports. stone LNG (GLNG) and Queensland Curtis consider protected long-term contracts when
LNG (QCLNG) totalled 1.86mn tonnes in Feb- granting permission to export a certain amount
WHAT NEXT: ruary, which represents a 3.1% drop year on year. of natural gas.
The move has sparked In January, exports from the three key LNG pro- Despite being introduced six years ago,
concerns over long- jects were down almost 12% y/y. the Australian government has yet to use the
term contracts and The drop in exports from the three facilities ADGSM.
energy security from key can be traced to a heads of agreement (HoA)
importer Japan, as well signed last September by the three LNG export- Japanese concerns over reforms
engendering worries it ers with the Australian government so as to Even without activating the ADGSM, the im-
could risk international increase gas supply for domestic consumption. position of the new reforms has already caused
claims by foreign Domestic demand for natural gas has risen in concern among some of Australia’s major LNG
investors. Australia as a result of coal-fired plant outages as buyers, most notably Japan. A senior Japanese

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