NAB Sees Australian LNG Below Capacity

National Australia Bank (NAB) has forecast Australian LNG export volumes in fiscal 2017-2018 (July-June) to be some 5.2mn metric tons (mt) shy of a forecast given by the country’s government in October, NAB’s Natural Gas and LNG Market Outlook showed November 29.

“We forecast that Australia will export 58.1mn mt of LNG in 2017-18, based on the assumption that some terminals will run well below nameplate capacity,” NAB said. “This forecast is somewhat below the Department of Industry’s forecast of 63.3mn mt over the period,” it added.

NAB noted that Australia has two LNG terminals still under construction: the Shell-operated Prelude FLNG off the coast of Western Australia; and the Inpex-operated Ichthys in Darwin.  Once they are complete, late this year and next year, respectively, Australia will have a nameplate export capacity of around 85mn mt – the largest in the world, it said.

“However, we do not expect actual exports will reach this level as some of the Queensland LNG terminals will be forced to run well below capacity,” it said.

It cited data from the Australian Energy Market Operator which shows that only Australia Pacific LNG is running close to capacity, while Queensland Curtis LNG can trade on a portfolio basis and send much of its coalbed methane to the local market, while Gladstone LNG production continues to lag.

Meanwhile, Australian LNG export prices are expected to reach A$10.64/GJ ($8.07/GJ) in Q1 2018, up from A$8.60/GJ in Q3 2017, it said.

“We see export LNG over AUD11.50GJ by the end of next year, which will present a major challenge to domestic gas remaining in single figures despite government intervention,” it said. The Commonwealth Government came to an agreement with the east coast LNG exports in October which was aimed at keeping the domestic market sufficiently supplied.