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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UK political parties repeat existing stances on energy
UK political parties repeat existing stances on energy
London, 13 June (Argus) — The two main UK political parties have set out their plans, including on energy and climate change, with just three weeks until the general election. Energy security and the cost to consumers is a recurring theme for both, but the manifestos present some marked differences in approach to the energy transition. Both the incumbent Conservative and opposition Labour parties doubled down on existing positions in their respective manifestos. The Conservative party said that it remains committed to the UK's 2050 net zero emissions target, but promises a "pragmatic and proportionate" route. The party's manifesto guarantees "no new green levies or charges while accelerating the rollout of renewables". The UK's net zero goal is legally-binding, and was passed with significant cross-party support under a Conservative government in 2019. The Conservatives have been in power since 2010, and fielded five prime ministers in that time. Recent polling data show a substantial lead for Labour, which performed well at local elections in May. Labour placed strong focus on the opportunity the transition offers, saying that it would place the UK at the "forefront of climate action by creating the green jobs of the future at home and driving forward the energy transition on the global stage". The party has committed to zero-carbon power by 2030, although it would "maintain a strategic reserve of gas power stations to guarantee security of supply", it said. The Conservative manifesto reiterates the party's plans to build new gas-fired power plants. The party had previously committed to a decarbonised power grid by 2035, in line with a G7 pledge, although that is not mentioned in its manifesto. The two main parties clearly diverge on their approaches to North Sea oil and gas production. The Conservatives aim to keep the windfall tax — which effectively results in a 75pc rate — on oil and gas producers in place "until 2028-29, unless prices fall back to normal sooner". Labour confirmed plans to lift the rate to 78pc and run the tax until the end of the next parliament, which is likely to be mid-2029. Labour is also clear that it "will not revoke existing licences" in the North Sea, but it will not issue any new licences — for oil, gas or coal. The Conservatives restated the party's aim to legislate for annual North Sea licensing rounds . Both parties back nuclear energy, including small modular reactors — though those are unlikely to be operational until after 2030. And both pledge to cut planning bureaucracy and tackle grid connections. Labour's plans to "double onshore wind, triple solar power, and quadruple offshore wind by 2030" would result in installed capacity of 31GW, 48GW and 59GW, respectively, from a baseline of end-2023. The Conservatives' target to triple offshore wind by the end of the next parliament would put installed capacity at 44GW in 2029 — below the 50GW target for 2030 set in 2022 — while it said it supports solar and onshore wind in some circumstances. Finance in focus Both parties are keen to pull in private-sector investment, while Labour took up an original Conservative pledge to "make the UK the green finance capital of the world". And both pledge to address the cost of energy for consumers — Labour through local power generation projects and home insulation upgrades, and the Conservatives by ruling out any further "green levies". The latter plans to reverse London's expansion of the ultra-low emissions zone — originally planned by Conservative then-mayor and later prime minister Boris Johnson. Labour said that it would restore a phase-out date of 2030 for new internal combustion engine cars — which prime minister Rishi Sunak in September pushed back to 2035 . On an international level, both parties mention climate leadership at summits such as UN Cops. The Conservatives pledged to "ring-fence" the UK's climate finance commitments, while Labour committed to restore development spending to 0.7pc of gross national income "as soon as fiscal circumstances allow". By Georgia Gratton Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
TTF front-month trades at highest since December 2023
TTF front-month trades at highest since December 2023
London, 13 June (Argus) — The Netherlands' TTF front-month gas price was trading near the highest level since last year this morning and afternoon as LNG supply outages contribute to market tightness. The price traded at €36.12/MWh ($38.88/MWh) on the Intercontinental exchange at 15:00 London time today. If the price holds around this level until the close it would be the highest front-month assessment since 8 December 2023. The contract opened at €35.43/MWh on the exchange, up from Argus' Wednesday assessment of €35.20/MWh, and climbed in the morning on the news of an extended shutdown at an Australian LNG terminal. Operations at Chevron's 8.9mn t/yr Wheatstone LNG export terminal in Australia may be disrupted for several weeks , the firm announced today. Loadings from the terminal have been halted since 10 June because of unplanned maintenance. The outage was previously expected to last until 14 June and disrupt delivery of 3-4 cargoes, but could now last until 19-26 June, according to market sources and loading schedules. Although Europe rarely imports cargoes directly from Australia, the reduction in deliveries to northeast Asia will mean prices in that region have to increase to attract more Atlantic-basin cargoes, pulling up the TTF at the same time. Quantities of US LNG on the water have risen sharply since mid-May according to Vortexa data, despite no incentive for floating storage, suggesting that more vessels are taking the longer route to deliver cargoes to northeast Asia ( see US LNG on the water graph ). The Wheatstone shutdown comes on top of a second quarter of planned and unplanned outages at other export terminals. High utilisation rates at terminals mean any downtime translates directly into lower deliveries than expected and contributes to LNG market tightness. The US' 33mn t/yr Sabine Pass terminal may be undergoing maintenance this month, based on reductions in feedgas deliveries. An unplanned outage last month cut deliveries from Australia's 15.6mn t/yr Gorgon terminal, while Peru's 4.4mn t/yr Peru LNG terminal is down for two weeks of maintenance. In addition to LNG supply disruptions, unplanned constraints at Norwegian offshore infrastructure at the beginning of this month removed supply from the European market and pushed up prices. A crack in a pipeline in an offshore hub discovered on 2 June caused a shut-in at the Nyhamna processing plant. The cut in gas production from connected fields over the five days that it took for the plant to restart was equivalent to 2-3 LNG cargoes. Although Norwegian gas production and global LNG loadings have been lower than previously expected, demand in Europe remains muted. Stocks in the EU are higher than ever for the time of year, while industrial demand remains low. Temperatures have held well below normal in much of western Europe since the beginning of the month. Heating demand has been higher than normal for the period, but the weather is already so warm that conditions much cooler than normal can only spur small increases in heating demand. Gas-fired generation was weak in May as increased renewables capacity, strong nuclear output and low aggregate demand cut into the incentive for power sector gas burn. By Rhys Talbot TTF front-month US LNG on the water, mn t Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Forecast heatwave for Japan’s Tohoku to boost power use
Forecast heatwave for Japan’s Tohoku to boost power use
Osaka, 13 June (Argus) — An unusual heatwave may hit north Japan's Tohoku region in the second half of June, which would encourage utilities in the area to maximise available thermal power units to meet expected increased electricity demand for cooling. The Japan Meteorological Agency on 13 June published its forecast that the Tohoku area, along with south Japan's Okinawa region, will experience extremely high temperatures for this time of the year over 19-27 June with more than a 30pc probability of this occurring. The short-term outlook follows Tohoku having already faced tighter electricity supplies this week because of hotter than normal weather and the absence of nearly 5GW of thermal power capacity, comprising 2.85GW of coal-fired and 2GW of gas-fired capacity, for maintenance checks and repairs. The reduced coal-fired capacity includes the unexpected and extended shutdown of the technical problem-affected 1GW Haramachi No.2 unit, which is expected to be off line over 21 May-29 July, according to a power plant operational status notice by the Japan Electric Power Exchange (Jepx). Tohoku utilities lifted coal-fired generation to an average of 4.08GW during 10-12 June, up by 3pc from a week earlier, according to nationwide transmission system operator the Organisation for Cross-regional Co-ordination of Transmission Operators (Occto). Gas-fired output rose by 9pc to average 4.03GW, while oil-fired generation increased by 25pc to average 138MW during the period. Utilisation of coal-fired and gas-fired generation units reached an average of 78pc and 65pc respectively across 10-12 June, with oil-fired units at 23pc, according to an Argus survey based on Occto output data and operational power capacity provided by Jepx. Occto has ordered the Tepco Power Grid to supply electricity to the Tohoku Electric Power Network to avoid possible outages in the Tohoku area. Tohoku plans to secure up to 550MW for 3.30-5pm and 500MW for 5-8pm Japan time on 13 June. This followed Occto's similar order to Tepco to send to Tohoku up to 300MW for 6-7pm on 11 June and 300MW for 5.30-7pm on 12 June. The power reserve level in the Tohoku area was 2.82pc for 5.30-6pm on 13 June, below a minimum 3pc level necessary for any emergencies such as a spike in peak power demand and an unexpected shutdown of power plants. By Motoko Hasegawa Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Repairs at W Australia's Wheatstone LNG may take weeks
Repairs at W Australia's Wheatstone LNG may take weeks
Singapore, 13 June (Argus) — The platform servicing Western Australia's 8.9mn t/yr Wheatstone LNG may take weeks to return on line, operator Chevron said, as it conducts repairs on the offshore platform's fuel gas system. Operations at the platform were interrupted from 10 June, disrupting supply to Wheatstone's LNG production and domestic gas facilities located near the Pilbara region town of Onslow. The firm has started repairs on the Wheatstone platform, which is expected to be completed in coming weeks, a Chevron spokesperson said. LNG and domestic gas production will resume, following the safe completion of the repair works. The WA Gas Bulletin Board's medium-term capacity outlook operated by the Australian Energy Market Operator shows Wheatstone's domestic plant off line until 26 June, meaning supply could return on 27 June. The initial four-day disruption was expected to reduce production by 3-4 cargoes. But it is unclear how many more cargoes will be lost should supply return on 27 June as planned. The exact date of restart at the facility could be anytime from 19-23 June, an offtaker with knowledge of the situation said. Spot prices have risen again owing to the disruption. The ANEA price — the Argus assessment for spot LNG deliveries to northeast Asia for first-half July — was last assessed at $12.40/mn Btu on 13 June, up by 11¢/mn Btu from a day earlier and higher by about 69¢/mn Btu from two weeks ago. By Tom Major and Rou Urn Lee Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
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