Australia — formerly the world's largest LNG exporter — edges closer to importing the fuel in 2025, after years of supply warnings from the Australian Energy Market Operator (Aemo).
Anti-gas lobbying from environmental groups, new emissions laws, slumping exploration, and rising costs have all been blamed for forecasts of production falling below demand levels, even as gas use dips.
Debate about the rationale and demand for LNG continues, with no buyers having signed term sales yet. But the recent purchase of the proposed 386 TJ/d (10.3mn m³/d) Outer Harbor LNG project has raised expectations that deals may occur in 2025, to alleviate winter shortfalls from 2026 onwards.
Aemo is predicting southern Australia's gas output will drop by 40pc from 1,260 TJ/d in 2024 to 740 TJ/d in 2028, with four import projects proposed in the nation's south. Initial imports will most likely head to New South Wales (NSW) state, Australia's largest jurisdiction by population. NSW is largely reliant on the ExxonMobil-operated Gippsland basin joint venture for supply, and the closure of a 400 TJ/d plant at the formerly 1,150 TJ/d Longford facility this year has accelerated concerns. Australian firm Squadron Energy said its 2.4mn t/yr Port Kembla Energy Terminal in NSW is now ready for operations, which could cover NSW' entire winter demand of about 481 TJ/d, excluding gas-fired generation.
Limited storage capacity exists and no new major fields are under near-term development, but increasing pipeline capacity to bring enough Queensland coal-bed methane south could prove critical. Expansion of Australian pipeline operator APA's 440 TJ/d South West Queensland pipeline could be approved in early 2025, raising gas security.
LNG imports cost up to 25pc more than pipeline gas, with the AVX — Argus' assessment for month-ahead spot gas deliveries to Victoria — averaging A$12.46/GJ in 2024 to 27 December, while the Argus Gladstone fob price — an LNG netback indicator calculated by subtracting freight and costs associated with production from the delivered price of LNG to Asia-Pacific — averaged A$16.03/GJ for the same period.
On the export scene, Australian independent Santos will restart production at the 3.7mn t/yr Darwin LNG after commissioning the Barossa field in July-September 2025. The project has withstood significant legal challenges since 2023, with Santos promising an offshore carbon capture and storage facility later this decade to offset emissions.
Other Australian terminals will produce steady volumes in 2025. The Woodside-operated North West Shelf project took a 2.5mn t/yr train off line in 2024, reducing its nameplate capacity to 14.4mn t/yr. The facility will start processing about 1.5mn t/yr of onshore gas from Beach Energy and Mitsui's 250 TJ/d Waitsia plant from early 2025.
Energy election
Australia's federal elections must take place no later than May, in what could be a referendum on the Labor government's renewables-led vision for Australia's grid.
Abolishing Coalition-era gas exploration grants, Labor finds itself wedged between critics of further gas extraction and domestic shortfalls which may be already contributing to manufacturing sector weakness.
Aemo expects 13GW of gas-fired generation is required under Canberra's 2050 net zero target to firm renewables. But gas projects remain unpopular in many communities, while anti-fossil fuel member of parliaments could hold the balance of power in the next parliament, polls show.
Labor is sticking to its 82pc renewables by 2030 plan, while the Coalition has said it will not be met and it would make changes to Australia's 43pc emissions reduction by 2030 target, persisting with coal until nuclear generators can be built.
Regardless, it appears much more gas will be needed in the short term as coal plants retire, meaning the temptation to raid east coast LNG projects for supply will remain.
