Australian Gas Export Value Falls: Govt

Australia's LNG export volumes are to rise to 81mn mt in the fiscal year ending March 31 2020, up from 75mn mt in the previous 12-month period, but prices and overall revenues are expected to decline, according to government statistics published March 18.

The real value of Australia’s LNG exports is forecast to decline from A$51 ($29.9)bn in 2018–19 to A$49bn in 2019–20 and to just A$44bn in 2020–21, and remain in the A$44bn-47bn range to 2024–25.

Global LNG capacity has rapidly expanded over the last two years, with projects ramping up in Australia, the US and Russia. At the same time, demand growth has been slowing from the traditional Asian buyers. Weak demand has been further exacerbated by a warmer-than usual northern hemisphere winter, and the impact of Covid-19 in China, the report says.

LNG imports from China have been more heavily affected than domestic gas production and pipeline imports. There were reports of some LNG cargoes destined for China being diverted, driving Asian LNG spot prices to a new record low of $2.68/mn Btu in mid-February.

While Asian LNG spot prices are forecast to recover from the current record lows, ongoing overcapacity in global LNG markets is expected to constrain the extent of any price recovery over the next two years. After 2021, rising demand is expected to gradually close the gap on expanding global production capacity and support a rise in the Asian LNG spot price, the report says.

Upstream lobby group Australian Petroleum Production & Exploration Association CEO Andrew McConville said the data reminded Australians of the critical contribution of our oil and gas industry. “At a time of great economic uncertainty arising from the current pandemic, Australia’s resources and energy exports are helping ensure that Australia has the financial ability to respond effectively and strongly,” he said.

“The oil and gas industry underpins around 80,000 direct and indirect jobs – and hundreds of thousands of Australian jobs rely on the reliable, affordable and sustainable supply of oil and gas. At the same time, our exports will be an important contributor the Australia’s economic growth, a contribution that will be vital as Australia looks over time to recover from that challenging circumstances, both in terms of Covid-19 and its effect on global energy markets, we now face.”