Australian liquefied natural gas (LNG) exports hit 56.8 million tons (Mt) in calendar 2017, jumping 26.3 percent from 44.9Mt in the year prior.
Combined with higher oil prices, the increase in volumes pushed up Australia’s 2017 LNG export revenue by 44.1% to A$25.8 billion, according to the December LNG report from respected energy consultancy, EnergyQuest.
EnergyQuest CEO, Dr Graeme Bethune, said 2017 had been a watershed year for Australia’s LNG industry, with growth in demand from China the stand-out success story.
Total Australian LNG exports to China increased by 40.5% from 12.4Mt to 17.5Mt over the period.
“China is now Australia’s second-largest LNG market and Australia is China’s biggest LNG supplier,” Dr Bethune said.
“Increased Chinese demand is not only good for Australian LNG producers and our export revenue, but has an emerging positive impact for China’s environment. China is making a massive switch from coal to gas to reduce air pollution in major cities such as Beijing – and now Australian LNG is playing a significant role in achieving this goal,” Dr Bethune said.
“LNG jumped from Australia’s fifth largest export in 2016 to third largest export in 2017, overtaking Gold and Education.
“To put $25.8 billion of export revenue in perspective, this is more than the cost of Australia’s imports of passenger vehicles, which was $21.8 billion in 2016-17. Passenger vehicles are Australia’s second biggest import cost.”
Some of the highlights from the EnergyQuest December 2017 LNG Report are:
- 2017 was a great year for Australian LNG. Australian LNG reached 56.8 Mt, up 26.3% from 44.9 Mt in 2016.
- The higher export volumes together with higher oil prices are estimated to have increased total 2017 LNG export revenue by 44.1% to $25.8 billion.
- As the biggest LNG supplier to China, Australian LNG exports are helping China’s swith to natural gas to cut air pollution.
- Notwithstanding high LNG spot prices, total Australian LNG shipments remained steady in December at 5.3 million tonnes (Mt) (79 cargoes), compared to 5.2 Mt (79 cargoes) in November.
- We estimate that LNG export revenue jumped 7% in December to $2.6 billion, with WA export revenue of $1.4 billion, Queensland revenue of $1.0 billion and Darwin revenue of $0.15 billion.
- North Asian LNG spot prices continue to climb. As of 8 January, the Sling North Asia index was US$11.24/MMBtu (A$14.26) for February deliveries. Spot LNG prices are the highest since November 2014 driven by unusually cold temperatures in the Asian winter, together with strong Chinese demand.
- West coast LNG projects shipped 3.3 Mt in December (down from 3.5 Mt in November). Wheatstone did not ship any cargoes in December. It shipped one cargo in the first week of January.
- East coast LNG exports increased to a record 2.0 Mt up from the 1.7 Mt seen over recent months. On an annualised basis east coast plants operated at 24.0 Mtpa in December, 93% of nameplate capacity of 25.3 Mt, significantly above the 2018 rate assumed by the ACCC of 20.7 Mt.
- 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/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.