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EnergyQuest releases June 2019 LNG report

Published by , Editor
LNG Industry,

EnergyQuest has released its latest LNG report, including analysis of Australian LNG growth (2018 – 2019) and June 2019 highlights. A summary of the report can be found below.

Strong growth in Australian LNG in 2018 – 2019

  • EnergyQuest estimates that Australia exported a total of 75.1 million t of LNG in the 2018 – 19 fiscal year (FY2019), a total of 1111 cargoes and 21.2% higher than the 61.7 million t exported in FY2018.
  • Total LNG export revenue in FY2019 is estimated to be $50.5 billion. LNG is now Australia’s third largest export by value after iron ore and coal.
  • Australia was the world’s second largest LNG exporter in FY2019, just behind Qatar’s nameplate capacity of 77 million tpy. Australian production in FY2020 is likely to pass Qatar when EnergyQuest expects production to be around 80 million t, boosted by a full year of production from Ichthys and Shell’s Prelude floating LNG project which came online in June.
  • Most of the growth in production in FY2019 occurred from projects in Western Australia and the Northern Territory, notably INPEX’s Ichthys project and Chevron’s Wheatstone project.
  • Queensland exports increased slightly, from 20.5 million t in FY2018 to 21.8 million t in FY2019. The Queensland LNG projects produced an estimated 43 PJ in excess of export demand.
  • Japan continued to be the largest buyer of Australian LNG in FY2019, accounting for 41% of exports. However, China is now close behind, with 37% of exports. South Korea was the third largest market with 10% of exports. Japan is the biggest market for west coast exports but China is the biggest market for Queensland exports, accounting for 72% of Curtis Island shipments in FY2019.
  • Australia continues to be the largest LNG supplier to Japan and China and the second-largest to South Korea.

June 2019 highlights

  • Total Australian LNG shipments in June were 6.2 million t (90 cargoes), down from 6.4 million t (94 cargoes) in May, due mostly to an unexpected maintenance shutdown at the Pluto project and a week shutdown at Gorgon in the first week of June. Shell’s Prelude project (3.6 million tpy capacity) will further increase Australian production after its first cargo was shipped in mid-June.
  • Australian projects delivered 32 cargoes to China in June, well down on 38 in May and the same as delivered to Japan. Australia continues to be the largest LNG supplier to China, supplying 52% of Chinese LNG imports in May. China exceeded Japan in total gas imports (including pipeline) in May for the second month in a row.
  • Australia had been delivering 40 or more cargoes a month to Japan, but this fell to 33 in April and remained steady in May at 33. Thirty-two deliveries were made to Japan in June. Australia was far and away the largest supplier to Japan in May, with a 39% market share.
  • Australia delivered 13 cargoes to Korea in June, more than the deliveries last northern winter. Australia remained in second place in the Korean market in May.
  • The Brent oil price fell to the middle of June before increasing towards the end of the month. From a high of US$74.70/bbl on 16 May the price fell steadily to a low of US$61.66/bbl on 12 June. The oil price then steadily increased to a high of US$67.52/bbl on 28 June.
  • Sling North Asian spot LNG prices continue to be volatile, rising during June, from US$4.27/million Btu (July delivery) on 3 June to US$4.73/million Btu (August delivery) on 28 June but then falling back to US$4.30/million Btu (August delivery) on 8 July. The ACCC’s forecast of Wallumbilla netbacks for 2019, based on the LNG spot futures curve at end of June, averages A$6.32/GJ, down from A$6.75/GJ at end-May.
  • There were some spot cargoes from Wheatstone, Ichthys and Gorgon in June, but none reported from east coast projects.
  • West Coast shipments decreased to 4.3 million t in June (4.6 million t in May), with 63 cargoes in June compared to 68 in May.
  • East coast LNG shipments increased to 1856 kt in June (1765 kt in May), with 27 cargoes in June compared to 26 in May.
  • Queensland imported no gas from other states in June, with flows entirely in a westerly direction across the month. Flows were still in a westerly direction at the end of June. Net gas flows from Queensland to other states were 6.4 PJ in June.
  • CSG production from fields operated by the LNG producers was 114.4 PJ in June, down 3.5 PJ from 117.9 PJ in May. Total LNG pipeline flows were 104 PJ in June, down from 109 PJ in May.
  • Queensland short-term domestic gas prices in June were higher than those in May, averaging $8.66/GJ ($8.31/GJ in May) at Wallumbilla and $8.72/GJ ($8.39/GJ) in Brisbane.
  • Southern short-term domestic gas prices in June were also higher than those in May, averaging $10.84/GJ in Adelaide ($10.10/GJ), $9.51/GJ ($9.43/GJ) in Victoria and $9.57/GJ ($9.40/GJ) in Sydney.
  • EnergyQuest estimates of east coast spot LNG netbacks at the end of June were lower than east coast domestic short-term gas prices. Based on North Asian spot LNG prices of US$4.73/million Btu the EnergyQuest estimate of the Wallumbilla netback was $4.18/GJ at the end of June (below the ACCC end-June estimate of $6.38/GJ). Taking account of transport costs LNG netbacks were $4.86/GJ in Brisbane (end-month STTM $7.49/GJ), $6.25/GJ in Sydney ($8.99/GJ), $6.03/GJ in Adelaide ($9.40/GJ) and $6.63/GJ in Victoria ($9.22/GJ).
  • However, our estimate of the oil-linked netback at Wallumbilla was $10.64/GJ, much closer to actual prices than netbacks based on spot LNG prices. Taking account of transport costs oil-linked LNG netbacks were $11.32/GJ in Brisbane (end-month STTM $7.49/GJ), $12.71/GJ in Sydney ($8.99/GJ), $12.49/GJ in Adelaide ($9.40/GJ) and $13.09/GJ in Victoria ($9.22/GJ).
  • East coast gas-use for power generation was up by 1% (0.14 PJ) compared with a year earlier and higher than in May.

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