Oz LNG Exports Holding Strong: EnergyQuest

Australian LNG exports are holding at near-record levels, despite the global surplus of LNG and the contraction of economic activity due to Covid-19, energy consultancy EnergyQuest said in a report published on June 5.

National production increased in Q1 2020 to 19.9mn metric tons, up 11% quarter-on-quarter and only marginally below the record levels of the previous two quarters, it said. This equates to an annual run rate of 82.2mn mt/yr, significantly ahead of 2019’s production record of 77.3mn mt/yr.

Queensland’s LNG projects maintained gas production and LNG exports at a high level in Q1 2020. This continued into the current quarter, with Queensland exports hitting a monthly record in April of 2mn mt.

According to EnergyQuest, the resilience of Australian LNG exports is underpinned by continued growth in demand in North Asia. In Q1 exports increased by 1.7mn mt quarter on quarter, with growth in demand from Korea, China and Taiwan more than offsetting a small reduction in demand from Japan. In April Australian projects delivered 97 LNG cargoes to buyers in North Asia up from 89 cargoes in April 2019.

“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. About 90% of 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,” EnergyQuest said.

EnergyQuest expects total LNG export revenue for 2019-20 (July-June) to be around A$50 billion (US$35bn), similar to the previous financial year. It was already A$38bn in the nine months to March 31. However, lower oil prices are likely to have their full impact on export revenue next financial year (2020-21) when revenue could be as low as A$30bn.