2017 closes with a bang: EnergyQuest

Australian LNG enjoyed a great 2017 with production reaching 56.8 MMt, up 26.3 per cent from 44.9 MMt in 2016, according to EnergyQuest.

The higher export volumes together with higher oil prices are estimated to have increased total 2017 LNG export revenue by 44.1 per cent to $25.8 billion.

As the biggest LNG supplier to China, Australian LNG exports are helping with China’s switch to natural gas to cut air pollution.

Notwithstanding high LNG spot prices, total Australian LNG shipments remained steady in December at 5.3 MMt (79 cargoes), compared to 5.2 MMt (79 cargoes) in November.

EnergyQuest estimates that LNG export revenue jumped 7 per cent in December to $2.6 billion, with a Western Australia export revenue of $1.4 billion, Queensland revenue of $1.0 billion and Darwin revenue of $0.15 billion.

West Australian LNG projects shipped 3.3 MMt in December (down from 3.5 MMt in November).

Wheatstone did not ship any cargoes in December, but shipped one cargo in the first week of January.

East coast LNG exports increased to a record 2.0 MMt up from the 1.7 MMt seen over recent months.

On an annualised basis, east coast plants operated at 24.0 MMt/a in December, 93 per cent of nameplate capacity of 25.3 MMt, significantly above the 2018 rate assumed by the Australian Competition and Consumer Commission (ACCC) of 20.7 MMt.

The increase in east coast exports does not appear to have had any significant negative impacts on the domestic gas market.

With higher LNG spot prices, LNG netbacks are higher than east coast domestic short-term gas prices.

Based on marginal costs and spot LNG prices of US$11.22/million British Thermal units (MMBtu) the Wallumbilla netback was $10.84/GJ in December.

Taking account of transport costs, short-term prices were between $3.82/GJ (in Brisbane) and $6.95/GJ (in Victoria) below LNG netbacks.

EnergyQuest is an Australian-based energy advisory firm, which specialises in market analysis and strategy for energy companies and buyers, investors and governments.

You can read EneryQuest’s December 2017 LNG Report here.

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