EnergyQuest has estimated that Australia exported a new record of 81.4 Mt of LNG in 2022 (1,184 cargoes), up 0.5% from 81.1 Mt in 2021.
According to EnergyQuest, Australia is again likely to rank as the world’s largest LNG exporter in 2022, but on par with other major global producers, Qatar and the US, who were tied in 2022 with total exports of 81.2 Mt according to Bloomberg (3 January).
Australia’s 10 LNG projects have total production capacity of 88.6 million tonnes per annum (Mtpa), currently the world’s largest.
However, Australia’s ranking is under threat from Qatar and also the USA.
Qatar is in the midst of an expansion of its capacity to 110 Mtpa by 2026 and as high as 126 Mtpa by the end of the decade.
New LNG expansion in the USA, has seen it also threaten Australia as top producer.
Calcasieu Pass LNG started production in August 2022, and three more liquefaction plants are under construction or have reached FID in the US.
The Australian projects operated at 92% of nameplate capacity of 88.6 Mt, with most projects producing slightly less in 2022 than in 2021.
The notable exceptions were Gorgon and NWS, which produced an additional 2.8 Mt (up 20%) and 1.6 Mt (up 11%) respectively compared to 2021.
Pluto also produced at slightly more (+0.07 Mt) than in 2021.
Three of the west coast projects (Gorgon, Wheatstone and Pluto) operated at better than nameplate capacity, reaching 108%, 101% and 111% respectively, while APLNG and QCLNG on the east coast operated at over 98% and 96% respectively.
However, 2022 saw the problems at Prelude continue.
After finally reaching nameplate capacity in June 2021, the project was shut down by NOPSEMA in late December 2021 due to safety concerns.
Prelude finally came back into production in April 2022, but was shut down again in June over pay and conditions disputes with the Union.
The project was once again shut down for 2 months and only shipped seven cargoes in the second half of the year, operating at only 38% of nameplate capacity over the year.
Darwin produced only 1.3 Mt in 2022 (35% of nameplate capacity) as gas production from the Bayu-Undan field continued to decline.
Western Australian LNG production was up by 7% on 2021 to 49.0 Mt while Northern Territory production was down by 17% on 2021 to 9.2 Mt.
East coast production was down on the record of 24.1 Mt set in 2021, down 4% overall to 23.3 Mt in 2022.
The three Gladstone projects operated at 89% of nameplate capacity.
Gas use for east coast generation rose during 2022, partially replacing coal.
Use of gas for generation rose by 22 PJ in 2022 compared to 2021.
Western Australia dominated Australian LNG exports once again, supplying 60% of national exports, while Queensland produced 29% and the Northern Territory 11%.
The Chevron-operated Gorgon project in Western Australia was the largest contributing project followed by the North West Shelf and Wheatstone.
NWS production fell from top spot due to the reduced production from ageing gas fields.
Gorgon had the highest percentage growth, up by 20% on 2021 to produce 16.8 Mt in 2022.
EnergyQuest estimated that Australian LNG projects delivered a total of 81.1 Mt to customers in 2022.
Japan took back top spot as Australia’s top export destination with 31.2 Mt (39%) of Australian export volume, up 14.1% from 27.3 Mt (34%) in 2021.
China fell to second highest export destination in 2022 after overtaking Japan in 2021.
China imported 22.6 Mt (28%) of Australian export volumes, down 28.5% from 31.6 Mt (40%) in 2021, largely due to the slowing Chinese economy from COVID-related shutdowns.
All Australian projects except Darwin and Prelude delivered LNG cargoes to China.
The Conoco Phillips/Origin Energy’s APLNG project and the Woodside-operated NWS project were the two biggest suppliers to China, delivering 7.6 Mt and 5.6 Mt respectively.
Korea continues to be Australia’s third most popular destination with increasing import volume, importing 11.9 Mt in 2022, compared to 9.8 Mt in 2021.
For the first time, Australia exported a cargo to Europe in 2022, delivering a cargo to the Netherlands.
Reflecting higher exports and very strong international energy prices, EnergyQuest estimated total 2022 LNG export revenue was well up at A$90.4 billion, up 82% compared to A$49.1 billion in 2021.
Export income has been positively impacted by the record high international prices seen during 2022.
The massive increase in export revenue takes Australia well past the record level achieved in 2019 prior to the pandemic.
International spot gas prices have been at record levels through much of the year, although the majority of Australian cargoes are shipped on long-term contracts linked to the oil prices.
The Australian projects shipped 50 spot cargoes during 2022, 4% of the total cargoes shipped.
$78/GJ gas price cap in Europe, $12/GJ in Australia
Coincidentally both the EU and Australia announced gas price caps in the week before Christmas.
However, the timing is where the similarity ends.
The EU cap will begin from 15 February 2023 if the Dutch TTF month ahead price exceeds 180 euros/MWh, (US$56/MMBtu, A$76/GJ) for three days and if it is 35 euros higher than a reference price for LNG on global markets for the same period.
Once triggered the mechanism will remain active for at least 20 days.
While the EU cap would have been triggered from early August to mid-September, the TTF is currently well below the trigger level.
The TTF benchmark was US$20.62/MMBtu (A$27.80/GJ) on 16 January.
Also on 22 December, in Canberra, the federal government signed an instrument to bring the Australian A$12/GJ gas price cap into effect from the following day.
Clearly the federal government and the ACCC must believe that Australian industry is unable to compete against these high European energy prices.
The Australian cap was introduced to take action “to limit the worst impacts of the gas price increases resulting from Russia’s illegal war in Ukraine”.
Canberra is nearly 15,000 km from Kiev, Brussels is only 2,100 km.
Countries much more directly impacted by the war do not appear to have quite the same urgency as the Australian government in Canberra.
As we noted in the November report, the “emergency”, “temporary” price cap of $12/GJ applies to new domestic wholesale gas contracts by east coast producers for 12 months.
It applies to east coast gas producers and gas sold via contracts directly negotiated between the parties or agreed through the Gas Supply Hub (GSH).
According to AEMO the GSH volume-weighted price today (17 January) is $13/GJ, not $12/GJ.
Based on the headlines to date, nobody seems happy with the results of the intervention so far, not gas producers, not retailers, not gas consumers.
As The Australian summarised it (17 January), “The Albanese government’s gas market intervention has increased the confusion of industry, restricted supply to buyers and made worse the problem it was intended to solve”.
The latest development is that the ACCC has released its interim compliance and enforcement guidelines for the gas industry on the new price cap.
The maximum penalty for a company that breaches the emergency price order is the greater of $50 million or three times the value of the benefit obtained, or, if that value cannot be determined, 30 per cent of the company’s turnover during the period it engaged in the conduct.
