Australia sees recovery in LNG exports

Australian export volumes are forecast to decline to 78mn metric tons (mt) in April-March 2020–21, owing to technical issues at the Prelude and Gorgon LNG plants, according to the government's Resource and Energy Quarterly report late March. They are expected to recover to around 81mn mt/yr next year and remain there until 2025-6.

LNG export earnings are also forecast to fall from A$48bn ($37bn) last year to A$33bn this year but are then forecast to recover to $45bn in 2025–26, as prices recover.

In the December quarter 2020, export earnings rose to $7.3bn, up by 21% quarter-on-quarter ahead of Asian winter demand, but prices were 40% lower year-on-year, as weak oil affected export earnings. LNG export volumes rose by 3.5% year-on-year and 12% quarter-on-quarter in the December quarter 2020.

The outlook for the next wave of investment in Australian LNG projects is shrouded by considerable uncertainty, the report says, with weak market conditions delaying final investment decisions (FID). The proposed Scarborough to Pluto LNG expansion — where a 5mn mt/yr train would be added to Pluto — is the only substantial expansion to Australia’s LNG capacity in the investment pipeline.

Conversely, over the projection period, it is likely that at least one import terminal will reach FID and start importing LNG. There are five potential projects in southeast Australia, aiming to start commercial operation by 2022 or 2023. Despite the possible gas shortage in the east coast market over the short term, it is unlikely that all five will proceed, the report says.

The report may be read here.