Viewpoint: Australian LNG exports to slide in 2024
Australia's LNG exports are set to decline in 2024, as an increasingly complex regulatory environment frustrates producers' plans to offset field declines by backfilling projects.
Shipments from the world's third largest seaborne gas exporter are set to fall to 81mn t in the year to 30 June 2024 and further to 79mn t in the 2024-25 fiscal year, compared with 82mn t in 2022-23, according to Australia's Office of the Chief Economist.
Australian independent Woodside Energy is likely to take one 2.5mn t/yr train of its five-train, 16.9mn t/yr North West Shelf LNG off line in 2024, while fellow domestic operator Santos' 3.7mn t/yr Darwin LNG will sit idle as it prepares for backfill from the $3.6bn Barossa field, scheduled for first gas in 2025.
But the firms, Australia's largest listed gas exporters, face headwinds as they grapple with an environmental movement aiming to curtail Australia's fossil fuel exports.
Litigation by climate activists has delayed Barossa and the $12bn Scarborough field, Woodside's Carnarvon basin project to fill a second 5mn t/yr train at Pluto LNG.
Barossa's field drilling and laying of most of the gas export pipeline (GEP) have been paused all year, following a federal court ruling that Santos must hold consultations with native title holders regarding underwater cultural heritage.
A challenge to the Barossa GEP environmental plan (EP) is likely to lead to a delay in Barossa's completion, with Santos previously advising that first gas during the first half of 2025 was contingent on completing the laying of the GEP in 2023 and commencing drilling activities. It now appears neither can proceed before January 2024.
But Woodside received fresh approvals for seismic testing at Scarborough on 1 December.
Both firms have appealed for legislation to clarify EP requirements. But "times have changed" and industry must improve consultation and engagement, federal Labor resources minister Madeleine King has said. This is despite the government promising a review of offshore regulations. King's office has not detailed a timeline for the conduct of the review.
In a year marked by significant policy interventions in the energy market, Canberra also announced changes to taxes on gas export profits which are yet to pass parliament, with both the centre-right opposition Coalition and left-wing Green Party calling for compromises to pass the bill in 2024.
Australia's three east coast LNG projects will likely see supplies of onshore coal-bed methane rise after three consecutive La Nina years caused wet weather disruptions, with a 9pc forecasted rise in January-March exports.
Upstream production at Santos' 7.8mn t/yr Gladstone LNG reached a record 692 TJ/d in January-June 2023, while the upstream operator of the 9mn t/yr Australia Pacific LNG recently said output would be at the upper end of the 680-710PJ estimate for the year to 30 June 2024.
But with southern Australia increasingly reliant on Queensland gas owing to field depletion in Victoria's Bass Strait, the federal government could seek further domestic supply under its Domestic Gas Security Mechanism, despite recently securing 300PJ of extra gas until 2030
The Northern Territory (NT) government's approval of hydraulic fracturing in May has led to the commissioning of an engineering study for the proposed 6.6mn t/yr NTLNG plant — likely to be completed in the first half of 2024.
Fellow NT independent Empire Energy is aiming for a final investment decision on its 25 TJ/d Carpentaria pilot project early next year. But construction remains contingent on establishment of commercial flow rates from the untapped Beetaloo gas basin.
Elsewhere in the region, the 5.6mn t/yr Papua LNG in Papua New Guinea (PNG) is likely to reach final investment decision in early 2024 ahead of an early 2028 production start, while the 6.9mn t/yr ExxonMobil-operated PNG LNG facility expects to receive first gas from the Angore field in 2024.
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Japan’s Jera to handle 35mn t/yr LNG until FY2035-36
Japan’s Jera to handle 35mn t/yr LNG until FY2035-36
Osaka, 17 May (Argus) — Japan's largest LNG importer Jera plans to maintain its LNG handling volumes at no less than 35mn t/yr until the April 2035-March 2036 fiscal year. Rising renewable power supplies and the possible return of more nuclear reactors are likely to pressure LNG demand from Japan's power sector. Jera consumed 23mn t of LNG in 2023-24, down by 3pc on the year, although it handled 35mn t through its global operations during the same year. But Jera needs to secure sufficient LNG supplies to adjust for imbalances in electricity supplies and ensure power security, through more flexible operations. It is also looking to further promote LNG along with renewable electricity in Asian countries, while helping to reduce their dependence on coal- and oil-fired power generators. The 2035 target for LNG is part of Jera's three pillars of strategic focus, along with renewables as well as hydrogen and ammonia , which was announced on 16 May to spur decarbonisation towards its 2050 net zero emissions goal. The company plans to invest ¥5 trillion ($32bn) for these three areas over 2024-36. Jera also aims to retire all supercritical or less efficient coal-fired units by 2030-31 . This would help achieve the company's target of cutting CO2 emissions from its domestic business by at least 60pc against 2013-14 levels by 2035-36. By Motoko Hasegawa Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Chinese importers seek five LNG cargoes for Jun-Sep
Chinese importers seek five LNG cargoes for Jun-Sep
Shanghai, 15 May (Argus) — Five Chinese importers, mostly second-tier buyers, are each seeking one LNG cargo for June-September delivery, according to an official notice published by China's national pipeline operator PipeChina on 15 May. The five importers are PipeChina, Chinese independent ENN, Hong Kong-listed city gas firm China Resources Gas, Hong Kong-based Towngas and state-owned China Gas. PipeChina and ENN have indicated a target price of at most $9.50/mn Btu for their intended cargoes, both for delivery to PipeChina's 6mn t/yr Tianjin terminal. China Gas has indicated a target price of at most $9.30/mn Btu for delivery to PipeChina's 6mn t/yr Beihai termial. China Resources Gas and Towngas have both indicated a target price of at most $9/mn Btu for delivery to PipeChina's 2mn t/yr Yuedong and Tianjin terminals, respectively. This consolidated requirement came about because of a need for PipeChina to better leverage on its infrastructure advantages and, at the same time, meet the varying needs of gas importers and consumers in the country. But this requirement comes at a time when spot LNG prices are still somewhat higher than the importers' targeted prices. But the importers can choose not to buy if offers are not within their expectations. The front-half month of the ANEA, the Argus assessment for spot LNG deliveries to northeast Asia, was last assessed at $10.485/mn Btu on 15 May. Chinese importers mostly perceive spot prices below $9-9.50/mn Btu for June-September deliveries to be unattainable for now because there is strong buying interest from south and southeast Asia in particular. Indian state-controlled refiner IOC most recently bought LNG for delivery between 22 May and 15 June at around $10.60/mn Btu, through a tender that closed on 14 May. Thailand's state-controlled PTT most recently bought three deliveries for 9-10 July, 16-17 July and 22-23 July through a tender that closed on 13 May , at just slightly above $10.50/mn Btu. The most recent spot transaction was Japanese utility Tohoku Electric's purchase of a 10-30 June delivery at around $10.55/mn Btu through a tender that closed on 14 May . This is at least $1/mn Btu higher than Chinese importers' indications. Summer requirements have so far been muted but concerns among buyers about potential supply disruptions remain. Malaysia's 30mn t/yr Bintulu LNG export terminal suffered a power loss on 10 May, but this issue may have been resolved as of early on 15 May, according to offtakers. Some unspecified upstream issues may still be affecting production at the Bintulu facility, resulting in Malaysia's state-owned Petronas having to ask some of its buyers for cargo deferments, according to offtakers. Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Q&A: Brazil adds Asian indexation for flexible gas
Q&A: Brazil adds Asian indexation for flexible gas
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Sao Paulo state seeks biomethane boost
Sao Paulo state seeks biomethane boost
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