Amid the east coast electricity crisis there are strident calls for the Federal Government to limit Gladstone LNG exports to divert gas to the domestic market.

However, according to EnergyQuest’s Australian LNG Monthly for May 2022, it is much more complicated than that.

“While east coast spot gas prices spiked in May, Gladstone LNG exports actually fell, from 2.1 million tonnes (Mt) in April to 1.9 Mt in May. In fact, in May the Gladstone LNG projects were only operating at an average 86 per cent of nameplate capacity, down from 96 per cent in April. Of a total 29 LNG cargoes from Gladstone in May, industry sources estimate that 27 cargoes were delivered under long-term contracts, with only two spot cargoes in May.”

The destination of cargoes from Gladstone in May, included China (48%), Japan (23%), Korea (13%), Malaysia (10%) and Singapore (6%).

EnergyQyest says any desire to redirect gas to the domestic market that is already contracted by one of these countries under long-term contracts needs to be handled with extreme sensitivity. The situation is further complicated by the fact that the major buyers have already invested in developing the fields from which they expect to receive their supply.

“The Chinese companies CNOOC and Sinopec have shares of 50 per cent of QCLNG Train 1 and 25 per cent of APLNG respectively.  Petronas and Kogas have 27.5 per cent and 15 per cent shares respectively in GLNG.

“They have already made substantial down payments on the gas they have contracted. The gas is not ours; it has already been sold. They are also investing hundreds of millions of dollars a year to maintain supply.”

However, EnergyQuest also notes that there while there may be scope to direct more gas south from Queensland to alleviate the current crisis with coal generator outages, the options need to be carefully assessed with a full appreciation of the international ramifications.