LNG consumption to quadruple by 2020: AEMO

Queensland-based LNG facilities are driving gas exports

Queensland-based LNG facilities are driving gas exports

Total annual LNG consumption in Australia is forecast to be four times as much in 2020 as it has been in 2015 according to the Australian Energy Market Operator’s (AEMO) second annual National Gas Forecasting Report (NGFR).

“LNG export facilities in Queensland have brought international demand and international pricing to Australian gas markets” said AEMO Managing Director and Chief Executive Officer, Matt Zema.

“This is expected to more than double total gas consumption in eastern and south-eastern Australia over the next five years, compared to aggregated consumption in 2014 before the Queensland LNG projects began.”

The report highlights a transformation of eastern and south-eastern Australia’s interconnected gas markets over the next five years to 2020, following the ramp-up of gas consumption to supply LNG exports.

Annual gas consumption is then projected to remain relatively flat for all sectors over the rest of the outlook period to 2035.

At the forefront is LNG consumption, which is forecast to grow at an average annual rate of 32.5 per cent in the short term (to 2020) to supply LNG exports. Total annual LNG consumption is forecast to increase from approximately 354 PJ in 2015 to 1,444 PJ by 2020.

The report predicts a short term decline in gas power generation (GPG) consumption over the next five years due to an anticipated rise in wholesale gas prices; coupled with the pending expiration of existing gas supply contracts; the retirement of GPG plant Smithfield Energy Facility in New South Wales in 2018; and, a projected increase in renewable generation incentivised through the current renewable energy target.

However, Mr Zema said that assuming today’s market conditions and policy settings continue, AEMO expects total annual GPG consumption to increase to around 184 PJ by 2035, as industry invests in a range of generation sources to meet forecast electricity demand and replace over 2,000 MW of coal-fired generation withdrawals from the National Electricity Market.

Mr Zema said the continued restructuring of Australian industry is likely to contribute to roughly a 30 PJ decline in industrial gas consumption over the short term.

“The 2015 NGFR identifies pockets of forecast growth in the food and services industries in particular. However this is offset by the forecast decline in total annual industrial gas consumption over the next five years, as industry restructures away from gas-intensive manufacturing” said Mr Zema. “Total annual consumption for the industrial sector is then forecast to flatten to around 267 PJ by 2035.”

He added that new technologies and changing consumer behaviour were behind the flat forecasts for residential and commercial gas consumption over the next five years.

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